The Fed Minutes and Mortgage Rates

Just a few short hours ago, the Federal Reserve released the hotly anticipated FOMC “minutes” from its two-day meeting that took place back on April 30th and May 1st, 2013.

The contents weren’t all that exciting, though they seemed to be enough to result in a 200+ point stock market swing.

The markets opened considerably higher this morning, only to take a beating after the minutes were released, with the Dow falling roughly 80 points.

What Was Said at the Meeting?

  • The Fed basically said inflation was stable
  • Which meant they didn’t need to raise key interest rates
  • Because the economy is still questionable
  • But if and when the economy heats up they’ll change their tune

In a nutshell, the Fed said economic growth expanded moderately in the first quarter, unemployment edged lower (but employment growth slowed), and consumer price inflation remained low, with expectations for future inflation stable.

Put simply, there wasn’t all that much drama in the economy during the first quarter, and things appear to be on track, albeit not a fast track to anywhere good or bad.

The Fed didn’t even seem to express any excitement about recent developments in the housing market, highlighting the decline in existing home sales in March alongside rising prices.

For the record, those sales were revised upward today by the National Association of Realtors, and April existing home sales were the highest since November 2009, when the homebuyer tax credit gave the market a temporary boost.

Anyway, the takeaway is that the Fed isn’t yet convinced that the economy is good to go. It will take months of solid and convincing improvement for the Fed to taper its accommodative monetary policy.

That said, the Fed voted to continue its purchases of mortgage-backed securities (MBS) at a pace of $40 billion per month, and longer-term Treasury securities at a pace of $45 billion per month.

[What QE3 means for mortgage rates.]

Isn’t This Good News?

  • Mortgage rates are lower than usual
  • Thanks to the Fed’s MBS buying program, but it’s not going to be around forever
  • And once they stop buying mortgages we could see mortgage rates jump
  • Thanks to increased supply and an overall indication that the economy is strong enough to end the program

If the Fed continues to buy Treasuries and MBS, mortgage rates should stay low, right? After all, if demand for mortgages is strong, prices will rise, and yields (and rates) will fall.

Well sure, that logic is sound, but the Fed’s MBS purchase program is nothing new, and the fear of losing it after everyone got so accustomed to it is unnerving to say the least.

And guess what – the minutes revealed that some of the participants (unclear how many) “expressed willingness” to lower the rate of purchases as early as the Fed’s June meeting.

Meanwhile, one participant recommended deceasing the rate of purchases immediately, while another suggested shifting purchases away from MBS and over to Treasuries in light of the recent housing recovery.

In other words, there is increasing pressure on the Fed to slow (or end) its purchases of MBS, which will inevitably lead to higher mortgage rates.

And that day seems to be getting closer and closer as more and more positive economic reports are released.

Sadly, mortgage rates are already at or near 2013 highs, so if the Fed really decides to pump the brakes and slow their MBS purchases, 30-year fixed mortgage rates could say goodbye to the 3% range and settle in above 4%.

Of course, we might be fearing the worst for no apparent reason other than fear itself.

In prepared remarks before Congress this morning, Fed chairman Ben Bernanke didn’t seem to indicate any decisive action on the Fed’s behalf.

Rather, he noted that prematurely withdrawing policy accommodation before there is a clear sign of a recovery could do a lot more harm than good.

And let’s face it; there will be plenty of bumps in the road to recovery. Just look at the latest weekly numbers from the Mortgage Bankers Association, which revealed that mortgage applications declined 10% week-over-week.

Additionally, the refinance index has declined nearly 20% over the past two weeks to its lowest level since March.

Clearly the Fed won’t want to do anything drastic enough to derail the housing market, which after more than five terrible years has finally displayed a few months of solid gains.

Still, the Fed can only do so much to control mortgage rates, and as the economy continues to improve, rates will have nowhere to go but up.

Read more: Mortgages vs. inflation

(photo: Lyra Jaye)

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.


Greater Phoenix, AZ Housing Market Update October 2020

If you’ve kept an eye on the housing market in Arizona for the past year, you know it’s been trending hotter and hotter. October stuck with that trend. Homes are selling quickly and for higher prices. Check out the stats below.

Monthly Sales

According to data from the ARMLS® from October 1, 2020 to October 31, 2020, monthly sales in the Phoenix metro area rose +4.1% from where they were in September of this year. At 9,690, total monthly sales are a full +23.5% higher than sales during the same time period in 2019.

Data retrieved from ARMLS®.

List Price

At $457.7K, October saw a +6.9% year-over-year increase in average list price. Median prices also rose. With a +12.3% increase from October 2019, the median list price in October was $337K.

Data retrieved from ARMLS®.

Sale Price

Average sale prices increased by +23.2% in October 2020 compared to October 2019, landing at $425.3K. With a slightly smaller jump, median sale prices still rose significantly with +16.7% year-over-year increase. The October median sale price was $332.5K. November is forecasted to have a slight decrease in average sale prices, which would break the trend of steadily rising prices. Check back next month to check if the forecasts were correct.

Data retrieved from ARMLS®.

Days on Market (DOM)

The Average Cumulative Days on Market dropped by three days between September and October of this year, ending at 43. That’s a 16-day decrease from October 2019.
<img src=”” alt=”Data retrieved from ARMLS®.” width=”1060″ height=”510″ class=”aligncenter size-full wp-image-32344″ />

Want to Know Your Home’s Value?

With homes selling quickly in the Phoenix metro area, if you’re looking to sell, we can help you find out how much your home is worth. Click here to request your free home value report from a Homie pro!

A Message From Sales and Operations Manager, Wayne Graham

The Arizona Regional MLS (ARMLS®) has already declared 2020 to be our best year ever. Now is the time to reach out to Homie and let our expert agents help you sell your home.

Turn to a Homie

Homie has agents with significant local expertise in each of our service areas. These agents are knowledgeable and easy to work with. Click to start selling or buying with a dedicated and experienced Homie agent.


5 Tips to Hedge Against Inflation

To achieve financial freedom and grow wealth over long periods of time, it’s vital to understand the concept of inflation.

Inflation refers to the ever-increasing price of goods and services as measured against a particular currency. The purchasing power of a currency depreciates as a result of rising prices. Put differently, a rising rate of inflation equates to a decreasing value of a currency.

Inflation is most commonly measured by the Consumer Price Index (CPI) , which averages the national cost of many consumer items such as food, housing, healthcare, and more.

The opposite of inflation is deflation, which happens when prices fall. During deflation, cash becomes the most valuable asset because it can buy more. During inflation, other assets become more valuable than cash because it takes more currency to purchase them.

The key question to examine is: What assets perform the best during inflationary times?

Federal Reserve try to control inflation through monetary policy. Sometimes their policies can create inflation in financial assets, like quantitative easing has been said to do.

5 Tips for Hedging Against Inflation

The concept of inflation seems simple enough. But what might be some of the best ways investors can protect themselves?

There are a number of different strategies investors use to hedge against inflation. The common denominators tend to be hard assets with a limited supply and financial assets that tend to see large capital inflows during times of currency devaluation and rising prices.

Here are five tips that may help investors hedge against inflation.

1. Real Estate Investment Trusts (REITs)

A Real Estate Investment Trust (REIT) is a company that deals in real estate, either through owning, financing, or operating a group of properties. Through buying shares of a REIT, investors can gain exposure to the assets that the company owns or manages.

REITs are income-producing assets, like dividend-yielding stocks. They pay a dividend to investors who hold shares. In fact, REITs are required by law to distribute 90% of their income to investors.

Holding REITs in a portfolio might make sense for some investors as a potential inflation hedge because they are tied to a hard asset—real estate. During times of high inflation, hard assets tend to rise in value against their local currencies because their supply is limited. There will be an ever-increasing number of dollars (or euros, or yen, etc.) chasing a fixed number of hard assets, so the price of those things will tend to go up.

Owning physical real estate—like a home, commercial complex, or rental property—also works as an inflation hedge. But most investors can’t afford to purchase or don’t care to manage such properties. Holding shares of a REIT provides a much easier way to get exposure to real estate.

2. Bonds and Equities

The recurring theme regarding inflation hedges is that the price of everything goes up. What investors are generally concerned with is choosing the assets that go up in price the fastest, with the greatest possible return.

In some cases, it might be that stocks and bonds very quickly rise very high in price. But in an economy that sees hyperinflation, those holding cash won’t see their investment, i.e., cash, have the purchasing power it may have once had.

In such a scenario, the specific securities aren’t as important as making sure that capital gets allocated to stocks or bonds in some amount, instead of holding all capital in cash.

3. Exchange-Traded Funds

An exchange-traded fund (ETF) that tracks a particular stock index or group of investment types is another way to get exposure to assets that are likely to increase in value during times of inflation and can also be a strategy to maximize diversification in an investor’s portfolio. ETFs are generally passive investments, which may make them a good fit for those who are new to investing or want to take a more hands-off approach to investing. Since they are considered a diversified investment, they may be a good hedge against inflation.

4. Gold and Gold Mining Stocks

For thousands of years, humans have used gold as a store of value. Although the price of gold can be somewhat volatile in the short term, few assets have maintained their purchasing power as well as gold in the long term. Like real estate, gold is a hard asset with limited supply.

Still, the question of “is gold a hedge against inflation?” has different answers depending on whom you ask. Some critics claim that because there are other variables involved and the price of gold doesn’t always track inflation exactly, that it is not a good inflation hedge. And there might be some circumstances under which this holds true.

During short periods of rapid inflation, however, there’s no question that the price of gold rises sharply. Consider the following:

•  During the time between 1970 and 1974, for example, the price of gold against the US dollar surged from $240 to more than $900 for a gain of 73%.
•  During and after the recession of 2007 to 2009, the price of gold doubled from less than $1,000 in November 2008, to $2,000 in August 2011.
•  In 2019 and 2020, gold has hit all-time record highs against many different fiat currencies.

Investors seeking to add gold to their portfolio have a variety of options. Physical gold coins and bars might be the most obvious example, although these are difficult to obtain and store safely.

5. Better Understanding Inflation in the Market

Ultimately, no assets are 100% protected from inflation, but some investments might be better than others for some investors. Understanding how inflation affects investments is the beginning of growing wealth over time and achieving financial goals. Still have questions about hedging investments against inflation? SoFi credentialed financial planners are available to answer questions about investments at no additional cost to members.

Downloading and using the stock trading app can be a helpful tool for investors who want to stay up to date with how their investments are doing or keeping an eye on the market in general.

Learn more about how the SoFi app can be a useful tool to reach your investment goals.

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Intense Demand and Low Mortgage Rates Drive Home Values to Record Highs – PRNewswire

Monthly appreciation of home values in January matched recent record highs, while annual growth is higher than any time since 2006. Home sales are moving briskly, with homes typically staying on the market for 18 days as of mid-January before the seller has accepted an offer from a buyer — 28 days faster than in 2020 and 2019. For-sale inventory declined again in January, and now stands 26.3% below levels from a year ago.

The Zillow Home Value Index (ZHVI) rose to $269,039 in January, up 1.1% month over month, matching December’s all-time record for monthly growth in data reaching back to 1996. Annual home value appreciation was 9.1% — the largest annual growth recorded since June 2006, before the Great Recession.

“Homebuying demand has pushed the pedal to the metal for price appreciation this winter,” said Jeff Tucker, senior economist at Zillow. “Normally we’d be talking about the spring selling season ramping up, but it looks more like last summer’s selling season simply never ended. Buyers eager to secure more space and lock in today’s rock-bottom interest rates are having to move quickly and aggressively to win out in this competitive market.”

Home values rose in all 50 of the largest U.S. metros, with the most drastic yearly growth in Phoenix (17.1%), San Jose (14.2%) and Austin (13.7%). The slowest growth — a relative term in this case — was seen in San Francisco (5.3%), Chicago (6.7%), and San Antonio (6.7%). 

A few major demand drivers are keeping competition high and the market hot through the customarily cool winter. For one, a wave of millennials are now entering their peak home-buying years. The number of Americans aged 25-34 was 12% higher in July 2020 than July 2010, according to Census estimates — an increase of approximately 4.9 million people. 

Another is mortgage rates, which averaged 2.74% for a standard 30-year fixed in January — up slightly from a historic low of 2.68% in December. These rates are making monthly mortgage payments more affordable as a percentage of income, even when considering rising prices. 

The COVID-19 pandemic and widespread changes to work-from-home policies have also pushed many to reconsider what they want and need in their living space, and where it should be. 

Looking forward, Zillow economists expect home values to grow 10.1% in the next 12 months. The Zillow forecast for existing home sales has been revised up since December, driven by improved pending sales volumes and home purchase applications. Existing home sales are expected to reach 7 million in 2021, 24.8% more than in 2020. 

While home prices are rising quickly, rents are relatively stagnant. The Zillow Observed Rent Index (ZORI) was $1,721 in January, just 0.5%, or $9, higher than in January 2020 and up 0.3% month over month. 

Rents in many expensive, coastal metros are currently much lower than a year ago — down 9.2% in San Francisco, 8.8% in New York, 7.2% in San Jose, and 6.3% in Boston. Many Sun Belt and Midwest metro areas, on the other hand, saw solid rent growth. Phoenix led the largest 35 metro areas with 8.4% annual rent growth, followed by Sacramento (7.6%) and Indianapolis (6.9%).

Metropolitan Area*

Zillow Home Value Index, January 2021

ZHVI – YoY Change, January 2021

Zillow Observed Rent Index, January 2021

ZORI – YoY Change, January 2021

United States





New York, NY





Los Angeles-Long Beach-Anaheim, CA





Chicago, IL





Dallas-Fort Worth, TX





Philadelphia, PA





Houston, TX





Washington, DC





Miami-Fort Lauderdale, FL





Atlanta, GA





Boston, MA





San Francisco, CA





Detroit, MI





Riverside, CA



Phoenix, AZ





Seattle, WA





Minneapolis-St Paul, MN





San Diego, CA





St. Louis, MO





Tampa, FL





Baltimore, MD





Denver, CO





Pittsburgh, PA





Portland, OR





Charlotte, NC





Sacramento, CA





San Antonio, TX





Orlando, FL





Cincinnati, OH





Cleveland, OH





Kansas City, MO





Las Vegas, NV





Columbus, OH





Indianapolis, IN





San Jose, CA





Austin, TX





Virginia Beach, VA





Nashville, TN





Providence, RI





Milwaukee, WI





Jacksonville, FL





Memphis, TN





Oklahoma City, OK





Louisville-Jefferson County, KY





Hartford, CT





Richmond, VA





New Orleans, LA





Buffalo, NY





Raleigh, NC





Birmingham, AL





Salt Lake City, UT





*Table ordered by market size 

About Zillow Group

Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life’s next chapter. 

As the most-visited real estate website in the U.S., Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions.  

Zillow Group’s affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 ( 


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White homeownership rate hits nine-year high

Despite an unrelenting COVID-19 virus and economic recession, U.S. homeownership rose in the fourth quarter of 2020 from the same period last year. And it’s reached a record high for white homeowners, but fallen for Black Americans.

The overall homeownership rate in the fourth quarter of 2020 rose 0.7% above that of the fourth quarter of 2019, according to a new report from the U.S. Census Bureau. The share of Americans who own their own home was 65.8% in the fourth quarter of 2020, rising from 65.1% in the same period a year earlier, the Department said in a report on Tuesday.

That percentage is a drop, however, from the third quarter of 2020, which reported a robust 67.4% homeownership.

The homeownership rate for white Americans in the fourth quarter of last year was 74.5% – a nine-year high, and surpassing the fourth quarter of 2019’s rate of 73.7%. Homeownership rates for Black Americans dipped to 44.1%, the lowest rate since the first quarter of 2020.

Hispanic-American homeownership rose to its highest fourth quarter rate in three years, at 49.1%. Asian, Native, Hawaiian, and Pacific Islander homeownership was reported at 59.5% – up from the rate of 57.6% in the fourth quarter of 2019.

Making housing more affordable by bridging the affordable supply gap

In the last few years, the number of existing single-family homes for sale has decreased. But home prices have increased. To make homeownership a possibility for everyone, there needs to be a higher supply of affordable homes.

Presented by: Fannie Mae

Homeownership in Q4 2020 was highest in the Midwest – about 70.8%, according to the report. The South (67.7%), Northeast (62.6%), and West (60.4%) all reported homeownership rates above 60%, as well. All regions had higher fourth-quarter homeowner rates than in 2019.

The median asking sales price for vacant, for-sale units was $214,600 in the fourth quarter of 2020.

The average U.S. rate for a 30-year fixed mortgage fell to under 2.8% in the fourth quarter, which pushed up home purchases (though a lack of inventory and rising prices have hindered even higher rates of home ownership).

Approximately 89.1% of all housing units were occupied in the fourth quarter of 2020, and 10.9% were vacant. Owner-occupied housing units made up 58.6% of total housing units.

Owners over the age of 65 made up the majority of homeowners in the fourth quarter of 2020 at 80.2%. The under-35 crowd accounted for only 38.5% of homeowners.

It’s conceivable that the total number homeowners increases in the next few years, as well. President Joe Biden is hoping to pass a bill green-lighting a $15,000 tax credit for first-time homebuyers. If the bill is passed, those first-time potential buyers could use the $15,000 essentially as a down payment on the home.

This looms as a solution to prospective buyers looking to take advantage of historically-low mortgage rates brought on by the pandemic and recession.


First-Time Home Buyers Find a Tough Market—Here’s What’s Different This Year

Starry-eyed first-time home buyers are getting a rude awakening to the realities of today’s high-stakes home-buying market.

The coronavirus pandemic supercharged the housing market, as buyers urgently seeking more space flooded the market, lured by low mortgage rates. That’s on top of the usual dynamics of household expansion: Many millennials hit 30 and wanted homes that could accommodate a growing family. Amid a historic shortage of properties for sale, the result has been bidding wars and record-high prices. It’s enough to make a first-time buyer’s head spin.

Just under half of first-time buyers and more than a third of prospective buyers were either outbid on their dream home or discovered they couldn’t afford it, according to a recent® survey. Roughly a fifth of these buyers made five or more offers on different properties before having one accepted. surveyed 1,000 recent and first-time home buyers Jan. 7–11.

“The market has been extremely competitive,” Senior Economist George Ratiu. “There is a critical shortage of homes for sale, which has caused multiple bids to become the norm across the country.

“For first-time buyers, especially, this environment means having your financing and budgeting together is paramount,” he adds.

But it’s not all bad news. About 47% of first-time buyers were thrilled to find their budgets were larger than they had thought, according to the survey. That’s largely due to mortgage rates, which averaged just 2.73% for a 30-year fixed-rate loan in the week ending Jan. 28, according to Freddie Mac. However, 21% learned their money wouldn’t stretch as far as they had hoped.

Even those in a better financial position still had to compromise on what they wanted in a home—and where it’s located. About a fifth were forced to look in cheaper neighborhoods. Another fifth had to spend more than they had originally planned, and nearly the same number had to forgo some of the home features on their wish lists. These included things like a garage, a big backyard, a finished basement, and a pool.

To save up for a down payment, many also had to make sacrifices. Half of recent first-time homeowners saved up in less than three years by setting aside a portion of their paycheck each month, cutting out discretionary spending on the fun stuff, and depositing windfalls like tax refunds and bonuses in the bank.

Just over half, 52%, also turned to their family and friends for help.

“First-time buyers tend to be younger. This generation has higher student debt than any prior generation,” says Ratiu. “Not surprisingly, family help with providing down payment assistance plays a big role in today’s market.”