Good Friday AM,
This morning brought the biggest economic release of the month, the jobs report (and its ancillary metrics). It typically does not, and did, not disappoint. The miss between forecasts and actual may be been the biggest… ever. Markets were expecting 1mm new jobs, the print showed only 266k. WOW. Unemployment rate ticked up to 6.1, was expected at 5.8 (I don’t give this more than a glance as it does not offer much real insight into anything). It shows that more people are in the work force. That’s actually a positive. There are plenty of jobs available so more available workers will turn into more jobs. Some states are starting to see the writing on the wall that to get out of this stimulus hole (it is really anything but stimulating, allowing people to stay at home and not work continuing collecting unemployment and other government subsidies) they have decided they are not accepting federal stimulus. NO stimulus to hand out will make people have to get back to work. Sounds like a sound plan… unless there is a revolt over it. Anyway, bonds are doing fairly well. The 10-yr is at 1.55% and mortgage bonds are up a bit. Not a huge move by any stretch but we will take all pricing improvements we can get.
Here’s a little chart from the MBA which shows us a few things..
- More people are paying for their housing
- There are likely to be fewer and fewer distressed sales (and even fewer foreclosures for those holding that notion)
- Renters who are missing payments should start saving money as eviction moratoriums are sunsetting and they will likely need to either get caught up or find another option.
- Housing will stay constrained for the foreseeable future
This week the Research Institute for Housing America (RIHA), MBA’s think tank, released updated first-quarter 2021 results that allow us to assess how renters, mortgagors and student loan borrowers fared over the first 12 months of the COVID-19 pandemic. The updated analysis of the Understanding America Study (UAS) panel survey data, conducted by Gary Engelhardt of Syracuse University, and Mike Eriksen of the University of Cincinnati, provides close to real-time economic data on the evolving financial consequences of the pandemic by following, on a weekly basis, the same set of households from before the outbreak.
This week’s MBA Chart of the Week plots the percentage of mortgagor and renter households who reported, on a weekly frequency, having missed a payment in the last 30 days.
Household financial distress persisted into the first quarter of 2021. While the percentage of missed payments has slowly declined, as depicted by the dashed linear trendlines in the chart, 7.7% of renters (2.56 million households) missed, delayed, or made a reduced payment in March 2021, while 4.9% homeowners (2.33 million households) missed their mortgage payment. This is compared to a monthly average of 2.77 million renter households and 2.57 million mortgagor households in the fourth quarter of 2020.
The improving situation is also evident in other data. For example, according to MBA’s National Delinquency Survey, the seasonally adjusted delinquency rate decreased from 8.22% in the second quarter of 2020 to 6.73% in the fourth quarter of 2020, and again to 6.38% in the first quarter of 2021. However, this rate is still elevated compared to the 4.36% rate in the first quarter of 2020.
Engelhardt and Eriksen estimate that missed rental payments in the first three months of this year totaled $7.9 billion (vs. $7.4 billion in the previous quarter) and missed mortgage payments were $13.2 billion (vs. $14.5 billion). Over the past year, we assess that aggregate missed rental payments reached $35 billion, while missed mortgage payments reached almost $68 billion.
Please remain safe and healthy, enjoy the weekend and first, make today great!
