January Market + Economic Update 1/6/2022
Fellow Angelenos,
I'd like to take a moment to wish you a warm welcome to this new year! I hope you're healthy and well rested.
There is much to look forward to this coming year!
First, I'd like to share a success story:
Recently I had a client who wanted to buy a home, but was maxed out at a certain price point. The competition was fierce - 13 other offers. So I knew we had to get creative to win the deal.
I rolled up my sleeves and ran some models with her lender to find the right balance between purchase price, monthly payment, interest rate and attractive terms, so we could compete against cash offers.
We decided the best move on the chess board would be to do a temporary 2/1 buy down to get her monthly payments in a range that was feasible while increasing the purchase price 6-figures. On top of that, we increased the purchase price $25K to cover the cost of the upfront interest fee to buy the rate down (if this is confusing, you're not alone). I then got the seller to agree to credit my buyer the $25K, so she was out of pocket NOTHING for significantly lower interest rates for the first two years, knowing rates will be coming back down in the next 12-24 months.
The result: WE WON a heated bidding war and were able to keep her monthly payments below the amount they would have been on a 6-figure lower offer; like magic.
Today, she has the home of her dreams, can manage her monthly payments and couldn't be happier!
If you have specific questions about how this 2/1 buy down works - text or call me and I'll walk you through it!
In other news, inflation has been coming down for the last few consecutive months and economists are saying we are close to peak interest rates. Mortgage interest rates have also come down from their October highs. While home sales are down big for the past 10 months in a row, new construction home sales are slightly up.
We are currently in a receding market and prices have been crawling down at a slow pace, as inventory remains low while demand has tapered off as well. New inventory will be hitting the market this month and it will be good to see how the market responds.
In my next newsletter, I'll share a new practice that has been very effective to improve my mindset and call forth more success.
Warmest Regards,
Adam
WESTSIDE MARKET STATS:
Message me if you have questions about your specific neighborhood.
NOVEMBER MARKET + ECONOMIC UPDATE
Mark, the Founder of AllOneWealth, and I, are excited to provide an economic update with valuable information, industry insight, and professional guidance on the latest key trends.
Interested in learning more about markets, inflation, QE or how you can take advantage of current investment opportunities? Schedule a call with us.
Warmly,
Adam
NATIONAL 30-YEAR FIXED MORTGAGE RATES GO UP TO 6.85%
The current average 30-year fixed mortgage rate climbed 1 basis point from 6.22% to 6.23% on Wednesday, Zillow announced.
The 30-year fixed mortgage rate on January 4, 2023 is down 2 basis points from the previous week's average rate of 6.25%.
Additionally, the current national average 15-year fixed mortgage rate increased 1 basis point from 5.38% to 5.39%. The current national average 5-year ARM mortgage rate is down 7 basis points from 5.89% to 5.82%.
MARK'S TAKE ON THE STATE OF THE ECONOMY:
Happy New Year!
2022 was quite the year to be endured in the markets with it being the worst returning year since 2008’s Great Recession.
Depending on your asset allocation you could be down as much as 33%, or more, if you’ve been weighted heavily in Nasdaq and tech heavy growth stocks. While the S&P and Dow Jones fared much better, it’s still certain to have been a challenging year to stomach for many investors.
On the bright side: Of the 9 negative years we can look back on since 1990, 7 were followed by a very strong up year – as I highlight below in the Charts of the Month section – which gives us hope and an indication of what we might expect in 2023.
For all the challenges life brought us in 2022, I hope 2023 brings you 10x that in love and abundance in the New Year.
Below is your AllOne Monthly Market & Economic Update by the numbers.
Interested in learning more? Schedule a call with me HERE.
Warmly,
Mark S Sauer
MARKET UPDATE
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Equity markets ended a dismal year with yet another negative week, with all three major domestic indices down slightly. The S&P lost -5.41% for the month of December to end the year down -19.64%; the Dow Jones Industrial Average fell -3.63% to finish 2022 down -6.9%; and the Nasdaq declined -8.63% to cap off a year in which the tech-heavy index lost -33.1%. Developed International stocks were down -14.4% for the year while emerging markets finished down -20.6% in 2022.
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10-Year Treasury yields remained slightly above 3.7% to close out the year, just about 2% higher than where they began 2022. High yield bonds fell -1% in the final week of trading for the year, capping off yearly losses of -11%. High yield bond mutual funds and ETFs posted slight inflows of $103 million during the holiday-shortened week.
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In early December, facing new price caps from the European Union, Russian President Vladimir Putin threatened to cut oil output by up to 7% – however, the potential of a global recession seems to outweigh any supply concerns for the time being. The price for a barrel of oil started the month of December around $72 – rising sharply early in the month while ending the volatile year where it started just under $80/barrel. The Baker Hughes rig count showed an increase of three active rigs, to bring the US total to 779. While active rigs are up 33% for 2022, the number is still well below pre-Covid levels when active rigs numbered over 1,000.
Owning vs renting
CELEBRITY LISTINGS
"Service to others is the rent you pay for your room here on earth." Muhammad Ali