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In this Real Estate News Brief for the week ending February 12th, 2022\\u2026 the latest reading on inflation, home price growth, and foreclosures.

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. The latest inflation report shows that consumer prices notched up another .6% in January. That brings the annual rate of inflation to 7.5%, which is the highest inflation we\\u2019ve seen in 40 years. Much of the increase is due to the high cost of food, energy and housing costs, which include rents. According to MarketWatch, Wall Street analysts only expected a .4% gain in January. (1)

If you strip out food and energy for a core rate of inflation, it\\u2019s at 6%. That\\u2019s still twice the rate the Federal Reserve would like to see. Shawn Huss at Warsaw Federal calls inflation an \\u201ceconomic killer.\\u201d He wrote in an emailed newsletter: \\u201cIt is a tax that does not get collected and if people believe prices will be higher in the future, inflation could become entrenched.\\u201d

Huss also has some good news. He says that: \\u201cInflation expectations for the future remain relatively low. The 10-Year Treasury breakeven rate, or what the bond market expects inflation to run on average over the next 10 years, is a relatively low 2.42%.\\u201d

Jobless claims were down for a third week in a row. The Labor Department says there were 16,000 fewer initial state claims than the week before for a total of 223,000 applications. That\\u2019s the lowest number we\\u2019ve seen since December. But the number of people already getting unemployment benefits stayed the same at about 1.62 million. Economists expect that fewer and fewer people will be collecting jobless benefits as the omicron wave diminishes. (2)

Mortgage Rates

Mortgage rates are now at the highest level since the pandemic began. Freddie Mac says the average 30-year fixed-rate mortgage was 14 basis points higher last week, for a rate of 3.69%. The 15-year was up 16 points to an average of 2.93%. (3) Freddie expects the trend to continue because of the strong job market and the high rate of inflation, and says that that will probably take a bite out of homebuyer demand.

In other news making headlines...

Home Prices Higher in Q4

Homebuyers are facing higher home prices as well, although home price growth is expected to slow down with higher mortgage rates. The National Association of Realtors says the median sales price of a home was 15% higher in the fourth quarter of last year, compared to the year before. That includes both new and existing homes. That figure is down slightly from a 15.9% year-over-year increase in Q3. (4)

NAR tracked mortgage rates in 183 metros and says that two-thirds of them posted double-digit appreciation. That\\u2019s making it tough on homebuyers. The report says that the typical monthly mortgage payment is about $1,240 which is about $200 higher than it was a year ago.

NAR\\u2019S chief economist Lawrence Yun, says that many homebuyers are getting forced out of the market because of high home prices, but he also says that: \\u201cHome prices should begin to normalize later in 2022 as more homes come on the market.\\u201d

More Foreclosure Activity

Foreclosure activity is currently at its highest level since the start of the pandemic. ATTOM Data Solutions says it jumped 29% higher from December to January. That activity includes default notices, scheduled auctions, and bank repossessions. Year-over-year, they are up 139%. (5)

RealtyTrac\\u2019s Rick Sharga expects to see more increases throughout the year, but he also says: \\u201cIt\\u2019s likely that foreclosure activity will remain below historically normal levels until the end of 2022.\\u201d Back in 2019, foreclosure activity was about 60% higher.

Sharga wasn\\u2019t surprised by the January increase because foreclosures often slow down during the holidays and then surge a bit at the beginning of the year. He says: \\u201cThis year, the increases were probably a little more dramatic than usual since foreclosure restrictions placed on mortgage services by the CFPB expired at the end of December.\\u201d

Metros with the highest foreclosure activity include: Detroit; Atlantic City, New Jersey; Cleveland; Columbia, South Carolina; and Trenton, New Jersey.

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/coming-up-consumer-price-index-11644498273?mod=mw_latestnews

2 -https://www.marketwatch.com/story/u-s-jobless-claims-fall-for-third-straight-week-11644500332?mod=economic-report

3 -http://www.freddiemac.com/pmms/

4 -https://magazine.realtor/daily-news/2022/02/10/home-price-surge-continued-in-fourth-quarter

5 -https://magazine.realtor/daily-news/2022/02/10/foreclosure-activity-highest-since-pandemic-began