People have been blurting a lot of weird shit. If you can’t beat ‘em, join ‘em.
We’ve been in a long cycle of not trusting the information we are given, discrediting each other’s sources, leaning more into conspiracy theories than data and generally just working ourselves up into an unproductive lather that only serves as a means of releasing the immense amount of stress and pressure most of us are under. The only problem is that the release isn’t real, so the relief is temporary and escaping.
I swear I’m talking about real estate and economic data.
It’s another BLS Jobs Report Day. And this report has become somewhat infamous. First because we couldn’t figure out how the labor market stayed so strong, then because we saw major revisions to the report which spurred all the conspiracy theorists and now because the data has once again strengthened. So much energy, especially from economists hired by real estate and mortgage companies, has been spent poking holes in the data and desperately grasping for a sign of a recession. Let me explain why. First though, I’ll fill you in on the latest numbers.
Hiring Slowed.
We added less jobs than expected in January. Hiring slowed to $143,000. This would normally lead to a rally on mortgage bonds as investors would see recession concerns and then move their money to a safer asset like bonds. However, even though hiring slowed – the unemployment rate went down to 4%. Then I saw that University of Michigan’s survey of consumers showed that expectations about inflation are not encouraging. The report showed an expected increase of 4.3% over the coming year.
Barry Habib, an analyst almost every mortgage company hires to give advice to their loan officers, has been trying to convince us for not one, not two, but approaching three years now that the labor market is on the verge of collapse. This morning as he was trying to blame illegal immigrants for the skewed labor force numbers – it just felt like such a far stretch that I stopped and thought to myself, “what if we just accept the data for what it is?”
What would that look like?
If we stop with the theories and bullshit, here are the facts:
Inflation is sticky. This isn’t political and has nothing to do with the tariffs because we don’t know the impact of those yet. It has a lot to do with behavioral spending and American’s refusal to live within their means. Evidenced by data on consumer debt.
The labor market is persevering. Even with revisions up and down, the labor market has not crumbled under the Fed’s rate hiking scheme. This is to Powell’s credit because that’s his whole job mandate – combat inflation without breaking the job market. Evidenced by the data on both inflation readings and jobs numbers. Again not conspiracy or politics, if we just read the data.
Housing is picking up. In a major way. I could say this based on the fact that we received nine new contracts last week and then another five this week, several of which were contingent - meaning they will result in even more escrows. And, I’m just a small fish. So this point is not evidenced by my personal experience. It is evidenced by the fact that mortgage applications increased 3.1% in January.
What do we do with this information?
We have to accept one simple fact. This year is going to be busy for some people. The strength of the labor market tells us that there are people out there who can in fact afford to buy homes. Instead of arguing with that, we should lean into it. I’m not saying it will be easy for anyone to buy a home, because inventory is still an issue. But there will be a lot of business done this year; it’s just a matter of who’s going to do it?
For our buyers, my advice is similar. If you want to buy a home this year, don’t assume it is impossible. There will be a lot of people buying homes this year and you certainly could be one of them. You just need a plan.
If you missed Property Pursuits this week, you should check it out for more on interest rates and whether they will be coming down this year – plus three specific strategies Sandi and I have been using to help our clients win.
And if you are local to Reno – now is the time to grab your ticket to The Future is Female. If you haven’t heard, we are doing a special spinoff to empower women in wellness. We’ll be covering advocacy in your healthcare journey, hormone therapy, fitness and why women need community to live their best lives. You are not going to be pleased with yourself if you miss it.