Mortgage Market Update - "Loading, Loading" (recap 1/31-2/4)

I did a quick Zillow search (sorry realtors, please forgive foul language in using the z-word). At some price points, there is just not figuratively, but actually literally?NOTHING?for sale right now...NOT ONE RED DOT.??I look at my pipeline and see the national trends noted below mounting.?There is a backlog of pre-approved want-to-be buyers out there, but inventory remains a problem.??In this week's mortgage market update, I share how these trends impact the market and how [for many] new construction becomes the complicated solution.

• Private payrolls fell by 301K in January vs the expected 200K gain, according to ADP. The drop is blamed on the Omicron variant’s spread.
• The core personal consumption expenditures price index, an inflation gauge watched closely by the Fed, rose 4.9% year over year in December.
• Job openings totaled nearly 11 million in December, more than 4.6 million above the total unemployment level, according to the Labor Department.

• Although housing inventory remains tight, single-family housing starts reached 1.123 million last year, the highest level since 2006.
• Newly built homes made up more than one-third of homes for sale in December, the highest share on record, according to Redfin.
• Purchase applications were up 4% last week, while refi applications jumped 18% for the week. Both were still lower than a year ago.

Kat:?"Where did you put it?"

Ryan:?[frozen, taps his head like Winnie the Pooh, deep in thought]?"Loading...Loading...Loading..."

Watching Ryan "load" is a frustrating waiting game.?It is like opening Zillow, searching for "Wakefield, MA--2 bed--$300-$450k" and waiting for a new listing to pop-up.?I just did it there were zero active listings for sale.??

Per the notes above,?the pool of buyers is growing much faster than the available listings.?For about 1/3 of aspiring buyers, the answer to the listing shortage has become new construction.??This usually means buying in a new building, conversion, or development.??With new construction comes a variety of opportunities and challenges.?This month, I will cover this on upcoming episodes of my "Finance with Factor" podcast.??We will discuss buying "off market," new construction, and redevelopment with realtors embedded in a few projects.?All past episodes are available everywhere you listen to podcasts.?In the meantime,?here are a few tips:

1. Build a team with new construction experience.?The realtor, lender, and attorney will need to work closely together and be actively attentive to timelines and budget.?The smoothest new construction deals have a team that communicates well and is use to working together.?
2. Expect delays.?Builders are more optimistic than kindergarten teachers!?They will say they are on track until the day before and then push on month, which translates to two.?This is especially true while supply chain issues continue crippling construction sites.
3. Be nimble.?Work with a lender who has a variety of financing options.?This will allow you to "shop" for the right product to fit the home, navigate volatile rate markets, and avoid costly long rate locks or extensions.??
4. Know all your options.?Anticipate #1, #2, and #3.?Knowing the plan always makes things less stressful.?Buying a brand new, customized to you home should be fun...these steps will ensure that it is!!

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