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This is mortgage mindset,
a mortgage matchmaker series.
And today we are joined
by the one, the only,
the name on the door.
Sherry Riano. Hows it going?
It's going pretty good.
Can't complain. Good.
So we are going to be talking
today about the CPI report
that's coming out this
week on the twelveth.
That is by the US Bureau
of Labor. And Sherry,
I'm super excited to hear what
you have to say on just
what the report is.
How does it affect us in our
daily lives in real estate?
what's your predictions
for this report?
And really just get
a feel for it.
So I'm going to just hand
it over to you.
Let's get this thing started.
All right. Wow.
It's a lot of pressure today,
but yeah,
the consumer price index,
so what that is,
is the average price of goods
over a period of time,
such as food,
housing and transportation.
Housing is a big one there for
us. Housing is a huge one.
Yeah.
That's where we are in the
world. Right. That's It.
It's also a key indicator of
whether we're in inflation.
And of course,
based off the tapping the brakes
on overnight lending rates.
Right. Yeah. The fed said, yeah,
I'll tap the brake a little bit.
Looks like they feel like that
they're getting it somewhat
under control. Of course,
we're at somewhere around
3% right now.
They want to have it basically
two and under.
So we're getting there.
So what they have initially
done has taken effect.
We have seen the inflation
numbers come.
Consistently 9% over the summer.
Yeah,
it does kind of blow my mind
that there needs to be some
level of inflation. Right.
Their goal is not 0%,
the goal is 2%.
And so you hear the cost of
living increase and
stuff like that.
And so that's kind of where all
these numbers tie into.
But now we're seeing gas come
down. That's it. Yes.
I put gas in my car for 260.
I could do that. A gallon.
That worked for me. Yeah,
of course,
the milk is still kind
of hefty out there.
The grocery bill is still
a little steep.
and I think hopefully we're
going to see that come down
a little bit more.
I know that we just went through
the holidays and so I had
read before Christmas
that this was supposed to be
expected to be the biggest
travel holiday since.
Before COVID Before COVID And it
was absolutely. That's huge.
That means people are
out spending money.
That means people are traveling
and they're feeling a lot more
confident about where
the world is,
I think a little more secure.
Where before they were still a
little nervous about traveling
and being in that condensed
little can that we
fly in the air.
Sherry, in your 20 plus years,
have you ever seen inflation
at 9% like that before?
No.
Really? That's secure. Okay.
Have you ever seen an
inflation kind of,
I want to say feels like,
almost like a bouncy ball where
it's just like bouncing up and
down. Over the last few years,
we've seen such a
high inflation.
We've seen inflation come down.
Have you ever seen anything
like this at all?
Not at the rate that
this all occurred.
It was like we went from zero to
9% in a matter of no time.
So I have to openly admit that
some of the guys that speak
about this Ryan Hill Barry B.
Barry B. Long time, was saying,
hey,
you are letting this inflation
number get out of control.
And the fed was sitting there,
no, no, we're good.
If we go up to six, well,
they let it go up to nine,
and all of a sudden they want
to slam on the brakes.
So there were people out there
talking about, look,
we need to try to back this
number down a little bit before
it gets too aggressive.
But
I'm not the fed.
I'm just telling you what
happened Monday morning,
quarterback.
This is exactly how
it feels like.
so how does the CPI report,
how does that affect real know,
how does it affect interest
rates, property values,
just anything? Well, I mean,
the reality is that when short
term lending goes up,
mortgage rates go up because
it's part of selling the bond
and money's moving money. Right.
Even though the short term rates
are not a direct effect
to mortgage rates,
they do have an effect.
Right.
So that can affect the
interest rates.
And obviously we saw
rates go up to 8%.
So that obviously happened where
property values are concerned
right now,
I don't think much is going to
stop the increase of property
values just because there's
just not enough inventory.
People keep running around
talking about,
hey, it's 2008, oh my God,
we're going to have a collapse.
No, we're not,
because we just do not have,
we have more people than
we have houses for.
When you drive by any street
quarter and see another housing
rental apartment going
up as fast as it can,
because they have more people
coming into the area
than they can hold.
It's an indicator that we don't
have enough housing.
Not only that,
I think also the quality of
buyer is so much different
than it was in 2008,
where you would have someone
financing 102% on an adjustable
rate mortgage and really just
throwing all the closing costs,
everything in there going
in upside down,
and then the payment with
balloon two years
later than that.
They weren't even qualifying
with income documents,
asset documents.
We were doing nana loans like it
was no tomorrow, no income,
no assets.
And we paid for that dearly.
And I think that as we have seen
with the millennials and I
think with Gen Z, I mean,
they lived through that.
They saw friends get taken
out of their homes,
friends no longer in school
because they didn't live
in the area anymore.
I think it's affected them.
I think that's why they take
it very seriously.
when it comes to buying,
they really want to make sure
they've gotten all their
questions answered,
that they're comfortable
they're not comfortable with
having a serious debt to income
ratio when that percentage gets
to a certain point they're
not comfortable with,
I think it's a whole different
person and personalities
that buy today.
Millennials have been through a
significant amount of world
changing events.
The millennial
would rather have a dog than
a child. Yeah, absolutely.
And I also read that people are
buying fenced in yards,
not for kids anymore,
but for their pets. Yeah.
The mindset is just totally
different because the cost of
things, you think about it,
a dog or a cat,
you're not going to have to have
childcare to think about. Right.
Which is what?
It's been a hot minute,
unfortunately, guys,
since I've had a kid
in childcare,
but what are we looking at
nowadays? Two grand a month?
Oh my gosh,
that's a house payment.
It's a house payment.
you're reminded of the memes of
this person at the gas pump
that's like weighing, like,
did I eat today?
They're thinking about filling
up their tank and did I eat did
I eat tomorrow? Exactly.
I think also rent,
as it's reported in
the CPI report,
it's a huge motivator for people
to be moving.
If the CPI report shows that
rents are continuing
to continue.
Go up and go up and go up.
There's no sense in someone
paying $2,500 for rent if they
can afford a home. True.
There are people though,
that would rather pay that rent,
even pay more to have a
lifestyle that where you just
get out and walk. Yeah, right.
downtown living,
we don't have a lot of that.
I mean, Carrie does now.
I mean they've really made it
friendly and made it available.
But the new park is nice.
Yeah, but I mean,
like if you look at Raleigh it's
really not that. Know,
when you think about a big city,
right?
You think about New York City,
you think about you,
you think about these bigger
really and they're really
cities, not towns,
but they've set it up where you
can do all the walking and walk
to work and go to a grocery and
go to your drugstore and go out
and have brunch and you never
have to get in a car.
And unfortunately,
I know in our state we are
really dependent on
an automobile.
There's just very few towns or
cities set up to be able to walk
from the start of your morning
to the end of your day.
I think certain districts in
Raleigh are trying to change
mean they're really trying to
push for that. Unfortunately,
that comes know clearing
of some know building.
where there was one home on
three quarters of
an acre an acre,
you're building four or five
townhomes to replace that.
And so that also increases
property value of areas.
You have to think about the
people that are still
living there.
There's a lot to think about
when you're doing that to an
existing neighborhood.
but I think builders are also at
the point of do it or
be left behind.
Yes, absolutely.
They don't have an option
anymore of not to do it.
we still have
a lot of inventory to kind of
build up to in order to even
kind of meet the demand
that sits today.
so it's a little bit crazy.
so you want to talk about
predictions for 2024? I do.
I wanted to talk about
predictions for 2024 but also I
want to know what your thoughts
are on the CPI report that's
coming out on Friday.
Do you think we're going to
have a higher, lower?
Do you think with the holidays
that we just experienced where
so many people were
more traveling,
so many people were getting
out of town,
do you think we'll see
that showing up,
people shopping more because
they're buying gifts for maybe
that brother or sister or cousin
that they haven't seen in three
or four christmases?
Do you think we'll see that?
I think the possibility is there
to see some tick up in that just
because Americans have been
spending so much money,
it's something that's been
constantly talked about that we
have more credit card debt than
we've ever had before.
and that's very interesting.
So when you look at it that way,
my answer would be yes,
it probably might tick up.
Let's hope it doesn't really
hit a huge, large increase,
but I would say somewhere
between three two and three
three, probably, yeah.
I think the general mindset of
most investors today is like
they're going to have reductions
in the prime rate.
The Fed's going to drop rates
this year multiple times,
and so they no longer have to
price in that potential for
another hike unexpectedly.
I think that's the biggest shift
we've seen in interest rates
over the last 60 days, 80 days,
is the investors taking away
that insurance policy.
They were already building
into the rates. Right.
So that's nice. Okay.
And then the effect
of the holidays,
which you've kind of
already discussed,
we're going to see the increase
because we all went and had a
lot of fun with a credit card.
That's it? That's it.
Don't tell my husband.
We've had some credit
card excitement.
One thing I do want to point
out, just specific to our team,
is we had one of the busiest
Christmas to New Year weeks
we've had in maybe four
or five years,
where we had multiple contracts,
multiple mortgage applications
happening every single day,
busy every single day.
And I think that really is a
snapshot of what's happening
in the market already,
where people are already
preparing. If you wait too long,
you are going to be priced
out of a home.
If you're not active in
that first quarter,
you may not be able to afford it
in the second quarter. I agree.
I think that if you want to buy
and are looking to
buy this year,
the first quarter of the year
would be the great time,
and the fourth quarter would
be a great time, probably,
to refinance that rate so that
you're ahead of everybody else.
Because I think if you wait
until we actually see this true,
true decline in the
second quarter,
you are going to be sitting
with multiple
scenarios.
You're going to be sitting with
either you're paying way too
much for the property you've
got coming out of pocket.
Coming out of pocket because
they're going to want you to
sign an appraisal waiver saying,
I don't care what an appraisal
is for, you're going to pay me,
which can cost you more money
than that interest rate at 8%
could and we can break that down
for you at a lower later show.
But the reality is it would
cost you more money.
So it's just a lot of things
to think about.
So if you're sitting on the
sideline and you know you really
want to purchase this year,
it might be a good time to
reach out to an agent.
And if you don't have one,
please feel free.
We work with the top agents in
the area and have for years,
so we'd be happy to give you
a list of referrals.
Incredible partners.
Incredible partners they are.
And now it's time for market.
In a minute.
This is where we give you an
update on the conditions of the
market every single week,
no matter the topic of the show.
That way you always know what's
going on in the market.
Last week,
we saw an unemployment numbers
come in at 3.7%,
holding steady from
the month before.
216,000 new jobs were created.
Now,
what that means is we're
expecting a range somewhere
between 177,400 thousand.
So while that wasn't as many as
projected, also wasn't lower.
We typically don't see a benefit
in the market unless the numbers
come in lower than the lowest
expected number.
We also have to consider
that in December,
you have a lot of temp
employees hired.
that's going to really inflate
those numbers.
January is a big month
for layoffs,
mainly because those temp
employees are going back home.
so we could see those numbers
drastically reduced in January.
I think we will which will help
numbers even further
in February. Well,
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