Guideline Updates – some major conventional guideline updates dropped this week, including a significant overhaul on down payment requirements for 2-4 Unit Multifamily primary purchases and limited cash out refinances (or renovation loans!). Starting Nov. 17th folks will be able to purchase a 4plex as a primary residence with 5% down that can come entirely as a gift from a family member and or a co-signer. In the Portland Metro the current 4-unit loan limit is $1,396,800 which means you could purchase a $1.47M 4-plex with 5% down or about $74K. Assuming zoning permitted you could theoretically purchase or refinance a 4-plex worth $800,000, add an ADU and renovate the property with a budget of $600,000 as long as the after-improved value appraised for $1.4M. Rental income guidelines became more conservative on new rental properties. If you purchase a new home and use the income from a departing residence to help qualify you will need to provide: a lease agreement and a ‘rent appraisal’ that supports this income, or proof of receipt of two month’s rental payment (i.e. security deposit and first month’s rent). Previously only a lease agreement was required.
Mortgage Rates – increased to recent history highs. The price of Mortgaged Backed securities continues to decline. Rates are up approximately 1.25% from this time last year.
Jobs – the Job Openings and Labor Turnover Survey (JOLTS) showed that job openings rose from 8.9M to 9.6M. Hiring rate remained at 3.7% and the quit rate is at 2.3%. Job openings are down 6% year over year (Indeed is reporting 15% down). The Bureau of Labor and Statistics (BLS) Jobs Report showed 336,000 job creations in September. Average hourly earnings rose 0.2% last month and are up 4.2% (slight moderation from last month’s 4.3%) year over year. Part time workers increased 151,000, full time workers fell 22,000, and multiple job holders increased 123,000. ADP reported a steepening decline in jobs, 60% of employees are paid hourly and hourly wages have been stuck at $17/hour since February.
Manufacturing – the ISM Manufacturing Index rose from 47.6 to 49 in September due mostly to gains in the energy sector. The prices paid index fell 43.8% (down from 48.4% in August) which indicates inflation relief. Any number lower than 50 belies contraction.
Rents decreased 0.5% in September and are down 1.2% year over year. Remember this is a measure of new leases and not renewals. When renewals are included Core Logic reports rents are up 3.1% year over year. Either way this should improve the inflation outlook for future CPI updates as rental housing is a key element of that index.
Mortgage Applications to purchase homes fell 6% last week and are down 22% year over year. Refinances fell 7% last week and are down 3.2% year over year.