Market Update | 10-12-23 – Blue Bird Home Loans Blog

As expected, market is back focused on inflation even with unknown of conflict.

The market has broken out in the wrong direction. The market could stomach the PPI news yesterday even though that is a better “lead measure” gauge in a way than CPI is, which is completely a “lag measure.”

The job market, which I think are much worse already than the numbers has led the market to believe, once again showed limited job loss with only 209k claims. The continuing claims went up by 30k and surpassed the $1.7 M level again, but the general market believes the BLS report, or better known as the BS report, and thinks we have a rock-solid job market. I disagree, but one can disguise this through ridiculous seasonal adjustments and looking past the 2^nd jobs added. I know we are seeing A LOT of people buried in credit card debt, savings gone and default starting to increase.

The volatility from the new oversea has slowed and the market has reversed to its last week behavior with the stock market (equities) getting pummeled with the rapid rise in bond yields today. That has been the trend, equities increasing when yields come down and getting crushed with yields up. Not sure how anyone feels much better with a 4.55 10 yr vs. the 4.70 as the 4.55 10 yr at this point in the rate cycle has the impact of an additional hike, but the market has ignored many fundamentals for some time so the only solution here for rates to materially drop is to have things break. We need to the wheels to come off the bus.

I do not believe there is any chance for the soft landing and the level of volatility now is only increasing the chance of this getting worse.

I have been reminded on many calls today that selling homes right now is a math equation. If you use the Interest Party Contribution graphs to get the PREFERRED LENDING relationship for a listing and ultimately mirror what we are doing with builders by increasing prices and increasing the dollars available to get the rates down into the 5’s, I think you will find success and transactions that did not exist. In addition, take your prequalified buyers to builders in your market and manufacture a price, buydown, etc. that allows your buyer to afford the home and the builder to build for a reasonable return.

This is what will separate everyone right now. Things are not going to improve overnight, so we need to manufacture transactions any way we can. This is a HUGE value add to your local builders and agents.

Pricing has deteriorated by 30-70 BPS today depending on the coupon. The 10 yr is back hovering around 4.70 and markets are getting crushed. Feels like a normal day as of late again.

I will be setting a webinar to walk through the above with becoming a “preferred lender for listing agents” and deploying the same strategies we use with Builders into the resale markets. Watch for the invite. I am not sure on a time yet.

Josh Erskine

Chief Executive Officer

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