New Bill Wants to Ban Wall Street from Buying Homes ❌

Author

Kreg King
December 11, 2023

Hello all! Exciting weekend in the state of Ohio! Columbus Crew, Cincinnati Bengals, and Cleveland Browns all got the W! Hope you all had a winning weekend in the Real Estate world as well. We are back with the latest and greatest mortgage news.

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Read time: ~4 minutes

Rates ended FLAT compared to last week, and volatility was MODERATE. Rates remained in the mid to low-7 range for most loan types without paying discount points. Paying discount points can get you in low 7’s and high 6’s depending on loan type and credit.

Jobs Report Dampens the Momentum

Mortgage rates have been on a tear this past month with rates dropping at least 1%. Since then, we haven’t seen any real threats to buck the trend of declining rates. However, that streak came to an end on Friday following a better-than-expected jobs report. The employment data showed a surprising increase in jobs creation compared to projections. The strong jobs report resulted in a drop in the unemployment rate from 3.9% to 3.7%.

Key Takeaway : A strong labor market is bad for mortgage rates. This is because a stronger economy runs the risk of higher inflation and inflation is the arch nemesis of interest rates. As long as the labor market remains strong, there is no need for the Fed to cut rates anytime soon.

Big Week Ahead for Mortgage Rates!

Expect a volatile week for mortgage rates as we have the November CPI Inflation data on Tuesday and Fed Rate Decision/Statement on Wednesday.

The CPI Inflation is forecasted to come in at 3.1%. A lower-than-expected number would strongly benefit mortgage rates. Could this be the month we finally see inflation dip into the 2’s?! If inflation drops to 2.9%, we expect markets to rally and rates may permanently drop below 7. Conversely, if inflation comes in hotter than expected, expect mortgage rates to remain the same or increase slightly.

One day later, the Fed will release a new set of rate forecasts as well. The financial markets will closely analyze Powell’s forecasts to pinpoint any changes in the Fed's outlook for 2024. Given the positive jobs report on Friday, we anticipate Powell to maintain his reserved approach, reiterating that rates will remain higher for longer until the 2% inflation goal is accomplished.

Key Takeaway : The events on Tuesday and Wednesday could create more rate volatility than last week’s jobs report. There is a potential for a bumpy ride for mortgage rates in the week ahead.

New Bill Wants to Ban Wall Street from Buying Homes

In an effort to improve affordability and buying conditions for Americans, two bills were proposed last week that would ban institutional buyers from owning single-family homes. The “End Hedge Fund Control of American Homes Act of 2023” would force big investors to sell off all the single-family homes they own over a period of 10 years, and eventually ban hedge funds from owning any single-family homes entirely.

"The affordability crisis has been exacerbated in recent years by an increasing number of large investors purchasing a significant percentage of single-family homes, squeezing out prospective buyers," said Rep. Adam Smith, D-Wash., in a statement.

This bill is intriguing especially for those active in the Columbus, Ohio real estate market. You may recall from Nick’s newsletter a couple weeks ago, Columbus, Ohio ranks #1 for regional housing markets where institutional buyers are still investing heavily. Will be interesting to see what type of impact we may encounter if these large institutions are forced to sell their entire portfolios.

Key Takeaway : Many believe it is a longshot that this bill will be passed as it must be approved by both the House and the Senate. However, there is a growing support for this type of legislation among Americans as the affordability crisis deepens.

Instagram Posts from Last Week

Don’t hesitate to reach out if you need anything at all. Have a wonderful week!