We are waiting on the edge of our seats for the jobs report tomorrow. Mainly because our asses got kicked so badly this week by the bond market that we can’t sit all the way back comfortably. The US debt rating was downgraded, and the market reaction was tough. Yet tomorrow is a new day. Hopefully one that will bring good news for those of you home shopping this weekend.
A number below 200k in jobs added should be great news for interest rates because it will signal that the Fed could pause their rate hiking program again. All eyes have been on the strength of the labor market to dictate the Fed’s next move and if the number comes in less hot than June did, we should be in a pretty good spot.
The problem is that these numbers will be for July. Which is big month for summer hiring – high school and college kids who get jobs just for a month or two. Seasonal adjustments could ruin our weekend. Goldman Sachs is predicting they will. RBC Wealth Management is expecting a below consensus number of $185,000.
Moral of the story?
Our team reaches out to our preapproved buyers on Fridays to see if they would like their mortgage report updated for any homes they are viewing over the weekend. If you’re smart you know we do this to hopefully achieve some level of work life balance by getting some work done before the weekend and avoiding last minute scrambling. An added benefit, as the market has gotten more volatile, is that we are updating their preapproval based on current interest rates weekly. I would highly recommend you check in with your lender tomorrow in advance of shopping this weekend. If I’m not your lender and your lender is hit or miss on Fridays, my team and I are totally happy to fill in for them.
Should you buy in this market?
It’s been pretty intense lately and I wouldn’t blame you if you were beginning to wonder if maybe it’s time to hit the bench. I’m supposed to tell you to never quit until you get keys. However - as we discussed on our monthly housing opportunities webinar - there are some scenarios where it doesn’t make sense to buy real estate right now. So, let’s pretend that my livelihood isn’t tied to your decision whether or not to purchase. Let’s pretend I had taken my parents’ advice and found a career that wasn’t in sales or market dependent or had some kind of salary.
We’ll also keep this simple.
If your credit needs help right now, it doesn’t mean you can’t buy. Nothing I am writing right now is about you not being able to buy. I’m addressing whether or not you SHOULD buy right now. If your credit needs to work, this is going to make financing harder right now than usual.
I believe we are in the midst of some tricky economic times. If you are unsure about whether you will have a job next year and you haven’t fully funded an emergency savings account, I don’t want you increasing your housing expense right now and the truth is that a mortgage is likely more monthly than rent. We are going to learn more about the health of the labor market tomorrow. If you are in an industry impacted by layoffs or hiring and bonus freezes, I want you to be mindful about the large purchases you make. Including but not limited to a house that costs several hundred thousand dollars.
Monthly Cashflow. If you have been prequalified and know you need to shop in a specific price point – I don’t mean because you want a pool, I mean like you have to look in this price range due to proximity or school districts or safety – and the monthly payments are just honestly not possible for you, then you need to wait.
Down payment funds. On the other side of the monthly payment coin is the cash to close side. There are programs that help with your down payment, but they have higher interest rates. Or interest rates aside, if you are using a zero down program like the VA or USDA, is that making your payment jump out of your comfort range? It is easier to buy right now if you have 3-5% saved up. That’s not 20%. I did not say you need 20% down. But it definitely helps to have some right now so if you need to focus on saving for a bit then that’s what you do.
Waiting does not equal quitting.
Stay in the game. Keep working on your credit. Work hard actually.
Look for income stability, look to boost your income so that the monthly cash flow becomes easier.
Save money.
Keep in touch with your lender as you do all of this. Stay in the loop with your realtor and keep a pulse on the market.
I know I’m beating a dead horse because I’ve given this same advice the last two weeks. So I’ll mix it up next week, promise.