Zillow: Signs of a good spring home buying season ahead

GM. This is Mortgage Nuggets, the newsletter that has your back like that friend that reminds you when it's another friend’s birthday.

Here’s what I’ve got for you today

• Zillow: Signs of a good spring home buying season ahead

• Celebrity Home Loans cuts 92% of its staff

• Mortgage rates inch closer to 7%

• New housing starts fall, but completions are up

1. Zillow: Signs of a good spring home buying season ahead

Zillow predicts a positive spring home buying season in 2023, according to a recent press release. Despite affordability remaining a challenge for many buyers, properly priced homes are expected to have buyers, though fewer than in previous years.

The demand side of the market has cooled, but competition remains, especially in more affordable markets and neighborhoods.

"Affordability will still be a challenge for many buyers this year, but sellers who price and market their home competitively shouldn't have a problem finding a buyer," said Jeff Tucker, Zillow senior economist.

Life events like new jobs, marriage, and kids are expected to drive the market, as opposed to low interest rates over the past several years, but rising inflation and mortgage rates, as well as supply chain constraints, could push people out of the market.

While the housing market is expected to see a positive spring home buying season, it remains to be seen how rising inflation and mortgage rates, as well as supply chain constraints, will impact the market in the long run.

2. Celebrity Home Loans cuts 92% of its staff

Celebrity Home Loans, a retail lender based in Oakbrook Terrace, Illinois, has abruptly laid off around 92% of its staff, citing "unanticipated events."

The company emailed a notice to affected employees on Monday stating that "we must terminate your employment today ... at 5 p.m. EST."

The notice also stated that the company would be unable to process its full payroll obligations, and that employees would not receive compensation during this pay period.

Former employees said the payroll included not just salaries and wages but also commissions and bonuses for loans originated during January. Celebrity Home Loans had been operating in 48 states and has done $21 billion in home loans since 2006.

These cuts also shocked On Q Financial, with whom they had a conference call on February 7 to announce that On Q was acquiring Celebrity's remaining production group.

On Q said they had no knowledge of the liquidity issues that led to the layoffs, and the announcement of furloughs effectively ended the acquisition deal.

On Q is now trying to help former Celebrity employees find work and take over files for clients who have lost confidence in Celebrity's ability to close loans.

3. Mortgage rates inch closer to 7%

According to Freddie Mac, the 30-year fixed-rate mortgage increased to 6.32%, the highest level since January 12th, and the 15-year fixed-rate mortgage rose to 5.51%.

This is the second consecutive week of mortgage rate increases, resulting from a resilient economy, particularly due to consumer spending, which is increasing housing costs and impacting inflation.

Analysts expect mortgage rates to move within the 6%-to-7% range in the coming weeks, putting pressure on homebuyers. Despite positive economic data, many companies still expect a recession due to the Fed's rate hikes.

4. New housing starts fall, but completions are up

Housing starts in the US fell 4.5% in January from December, with;

• Single-family starts falling 4.3%

• Multifamily units starts falling 5.4%.

However, completions increased 1% overall in January from December.

Builders are likely to continue focusing on completing existing projects, rather than starting new ones, as newly completed home inventory rises, which should provide relief to a supply-starved market.

Home builders still face a difficult market due to affordability challenges and supply issues.

5. Need to know....

Inflation has already increased by 16.2% during this decade.

If your income has not gone up by at least 16.2% since December 2019, it means that in economic terms, your "real" wages are decreasing.

☀️ See you on Monday!

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