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In this Real Estate News Brief for the week ending April 9th, 2022... the Fed\\u2019s inflation fighting game plan, first quarter housing affordability, and the metros with more new listings.

Hi, I\'m Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.

Economic News

We begin with economic news from this past week, and the Fed\\u2019s plan to rapidly shrink its $9 trillion balance sheet to help control inflation. According to the minutes of its March meeting, which were released last week, the Fed plans to reduce its bond portfolio by about $95 billion per month. (1) Fed policymakers haven\\u2019t made a final decision yet, but they say the reduction plan could begin next month.

Federal Reserve Governor Lael Brainard said at a conference that she expects a series of rate hikes and a rapid winding down of the balance sheet to bring inflation to a \\u201cmore neutral position.\\u201d That includes bigger-than-usual rate hikes. Kansas City Fed President Esther George said in a Bloomberg TV interview that \\u201c50 basis points is going to be an option that we\\u2019ll have to consider, along with other things.\\u201d San Francisco Fed Bank President Mary Daly said during a meeting in Seattle that she doesn\\u2019t expect the nation to fall into a recession. She said: \\u201cWe could slow so it looks like we are teetering close to it, that\\u2019s possible, but it will be a short-lived event I expect, and then we\\u2019ll be back up.\\u201d (2)

Jobless claims came in at 166,000 last week, which is the second lowest reading in U.S. history. The last time jobless claims were that low was back in 1968. The job market is strong, and that\\u2019s one major buffer against the risk of recession. Wages are rising at a fast pace, although they are not keeping up with inflation. But jobs are plentiful, and workers are easily quitting one job for another. (3)

Mortgage Rates

Mortgage rates are also rising quickly. Last Thursday, Freddie Mac said the average 30-year fixed-rate mortgage was 4.72%. The 15-year was 3.91%. It\\u2019s gone even higher since then making it harder for many Americans to afford a mortgage. (4)

In other news making headlines...

Homes Affordability Drops in Many Areas

Rising mortgage rates combined with higher home prices are knocking a lot of people out of the home buying market. ATTOM Data Solutions\\u2019 first quarter Home Affordability Report shows that home price growth in the first quarter was faster than it\\u2019s been for at least 15 years.

It shows that median-priced single-family homes in 79% of the counties analyzed were less affordable in the first quarter than in the historical past. The same report at the beginning of \\u201clast year\\u201d showed that 38% of the counties were less affordable. (5)

ATTOM\\u2019s Rick Sharga says: \\u201cIt\\u2019s certainly no surprise that affordability is more challenging today for prospective homebuyers.\\u201d He says: \\u201cAs home prices continue to soar and interest rates approach five percent on a 30-year fixed rate loan, more consumers are going to struggle to find a property they can comfortably afford.\\u201d

Inventory Increasing for Spring Season

There has been an increase in listings for the spring buying season, with more on the way. Realtor.com says that new listings were up 8% last week, and a new survey shows that 64% of the people in the survey plan to sell their homes in the coming months. (6)

That\\u2019s already starting to bring prices down. According to Redfin, 12% of the homes for sale had a price drop during the month of March, although Redfin\\u2019s chief economist Daryl Fairweather says that \\u201cprice drops are still rare\\u201d but they do show \\u201cthere\\u2019s a limit to a sellers\\u2019 power.\\u201d He says: \\u201cSellers can no longer overprice their homes and expect buyers to clamor at their door.\\u201d Redfin says the average home has been selling 2.1% above its asking price. (7)

Cities with the Most New Listings

Realtor.com did some research as to which metros are seeing the most new listings. At the top of the list is Panama City, Florida. Daphne, Alabama is second on the list followed by Myrtle Beach, South Carolina; Jacksonville, North Carolina; Iowa City, Iowa, and Macon, Georgia. Rounding out the top ten are East Stroudsburg, Pennsylvania; Greeley, Colorado; Boise, Idaho, and Atlantic City, New Jersey. It sounds like there\\u2019s a little something in there for everyone.

That\\u2019s it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review!

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Thanks for listening. I\'m Kathy Fettke.

Links:

1 -https://www.marketwatch.com/story/balance-sheet-to-shrink-by-95-billion-per-month-as-many-on-fed-see-50-basis-point-hikes-coming-minutes-show-2022-04-06?mod=mw_latestnews

2 -https://www.reuters.com/business/feds-brainard-sees-methodical-rate-hikes-rapid-balance-sheet-shrinkage-2022-04-05/

3 -https://www.marketwatch.com/story/u-s-jobless-claims-drop-to-54-year-low-of-166-000-11649335442?mod=u.s.-economic-calendar

4 -https://www.freddiemac.com/pmms

5 -https://www.attomdata.com/news/market-trends/home-sales-prices/attom-q1-2022-u-s-home-affordability-report/

6 -https://magazine.realtor/daily-news/2022/04/07/housing-inventory-turnaround-possible

7 -https://magazine.realtor/daily-news/2022/04/08/there-may-be-a-limit-to-sellers-power

8 -https://www.realtor.com/news/trends/where-were-seeing-the-most-new-listings/