Good morning and happy Monday! This is going to be another light week for housing data. General news in the street today is headlined by a couple of interesting stories. First up, we talked last week about the number of homes in the U.S. that were still upside down on their mortgages after the huge runup during Covid. On the other side of the ledger, we have many homes that are “equity rich”. These would be the properties that have 50% or less of the market value in outstanding loans. 34% of all the borrowers in the U.S. meet this criterion. In other news today, rising rents may cause an additional inflation risk over the next year or so, as landlords are taking advantage of pricing power they didn’t have during the first 18 months of Covid to raise their rents 10% or higher in many cases. As home prices are pegged to “equivalent rents” for purposes of computing the CPI, a substantial rent increase will equate to a double whammy on the housing portion of inflation. Generally, housing contributes to 18% of the inflation calculation. That may soon go up!
Bonds today are down, with 10yr -Notes -6/32 to yield 1.31%. In MBS FNMA 2.50% are -1/32 to $103-27, yielding 1.50% and +85 to treasuries. Call us when you want to get involved, and have a great day!
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