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Your Guide to the Housing and Mortgage Markets; The Martini Factor (August 29 – September 5, 2022 Economic Update)

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The Martini Factor is curated by Certified Mortgage Advisor and Raleigh Mortgage Broker Kevin Martini to provide a glimpse of what is likely to impact Raleigh mortgage rates this week.  

The top 2 items likely to impact Raleigh mortgage rates this week

The ongoing market reactions to Powell’s speech last week.

Federal Reserve Chairman Jerome Powell gave a speech last Friday(August 26, 2022) at the annual Jackson Hole Economic Symposium indicating his very hawkish view and that the Fed’s fight against inflation is likely to cause pain throughout the economy. He also indicated that rate hikes will continue until inflation subsides. Stocks plunged on Friday, and mortgage bonds opened this week sharply lower. In fact, bond yields are at their highest levels since 2007. This indicates that mortgage pricing will likely worsen this week, as bond investors continue to process this news.

The Economic Reports this week.

This week’s economic calendar is quite full. The crescendo will be Friday’s always-important jobs report. The jobs report came out much stronger than market expectations last month, and investors are expecting the job numbers to cool a bit this month. It will be interesting to see whether that happens, and how the market will react. In the meantime, the JOLTS Job openings report is scheduled for release on Tuesday, along with the Consumer Confidence report. Any of these reports could trigger a market reaction.

Oh by the way…

It is never too early to start to explore your homeownership options and you are not too late either.  The first part of the homeownership journey is the loan and then after you have the certainty and being armed with price and cost clarity, the second step is to go find your home. The Martini Mortgage Group offers trusted advice with a frictionless digital mortgage process that provides certainty.  To contact Mortgage Strategist with the Martini Mortgage Group simply call: (919) 238-4934.

3 Kevin Martini Things That Could Impact Raleigh Real Estate 

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The question that is top of mind for many, that either one whom owns real estate in the Raleigh area or one whom want own real estate in Raleigh, North Carolina area, is if the perceived real estate pivot is an opportunity or a challenge.  According to Raleigh mortgage broker and Certified Mortgage Advisor Kevin Martini; “Right now there are 3 pivots in today’s housing market that could impact current homeowners and homebuyers.  They are inventory, price growth and interest rates”. 

INCREASE IN HOUSING INVENTORY

The number of houses available for sale in most markets across the U.S. and in Raleigh area has increased from the ultra-low levels of the past few years however there is still an undersupply of home for sale on the aggregate. The perception that we have shifted to a full blown buyer’s market is not correct.  The slight increase in inventory and days-on-market has provided some homebuyers with negotiating power. 

MORE TRADITIONAL HOUSE PRICE GROWTH

House values have risen by 20%+ per year in many markets throughout the pandemic. It is unrealistic to expect that this hose price growth will  continue moving forward. The growth of house prices is slowing to more of a traditional pace versus the pandemic pace, house price growth is forecasted to normalize.  Sure normalization means a deceleration form pandemic levels but declaration does not means depreciation.

FLUCTUATING HOME LOAN INTEREST RATES

Raleigh mortgage rates have risen by over 2% this year in response to high inflation and the removal of the Federal Reserve’s pandemic-era stimulus programs. This means that mortgage payments have increased for potential buyers however since there are higher weekly wages, the playing flied has remained level for keeping home affordable.

On the topic of affordability, check out episode 153 of the Martini Mortgage Podcast which highlights how higher home prices and fluctuating mortgage rates are not really impacting home affordability.

RALEIGH MORTGAGE BROKER AND CERTIFIED MORTGAGE ADVISOR KEVIN MARTINI

Even with the recent perceived pivot in the real estate arena, if you are still considering to make a move, it may be time to pick up your home search back up today.  Rember, it should always be home loan first and then go find your home. If you have questions about the increase in housing inventory, traditional house price growth or about the fluctuating home loan interest rates contact Kevin Martini by dialing (919) 238-4934. 

What is depreciation? 

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If you are thinking of buying an investment property in Raleigh, North Carolina or anywhere in the U.S for that matter, a powerful word that you need to know is depreciation. In fact, in the real estate investment space, there are 3 thing you need to know about deprecation. 

What is depreciation?

A tax deduction that real estate investors can take for the value of improvements on real estate investment property is called depreciation. According to the IRS Publication 946 (2021),  depreciation “… is an allowance for the wear and tear, deterioration, or obsolescence of the property.” One may not depreciate the value of the land since depreciation is only applicable to the value of the improvements on the land. To deprecate a property, you must own it, it must be used in your business or as an income-producing activity, it must have a useable life and that useable life must be greater than 1-year.

How is depreciation calculated?

For illustration only, if an investment property is worth $500,000, and the land is worth $200,000, you can get a tax deduction for $300,000 when you buy the property. Now you cannot take the $300,000 tax deduction all at once in 1-year however you can spread it out over 27.5-years for residential properties.

How can you benefit from depreciation? 

In the simplest form, deprecation allows you to take a ‘paper-loss’ when you purchase and/or own real estate rental property.  This ‘paper-loss’ shelters part of your rental income from taxes. IMPORTANT: depreciation will eventually need to be paid back when you sell the real estate rental property through ‘depreciation recapture’ (NOTE: there is a way to defer ‘deprecation recapture’ by using a 1031 exchange.  

This article has been written by Certified Mortgage Advisor and Raleigh mortgage broker Kevin Martini for informational purposes only and does not constitute legal, tax or financial advice.  Please consult with a qualified tax advisor for specific advice pertaining to your situation.  For more information on any of these items, please reference IRS Publication 946 and IRS Publication 527.

Contact Kevin Martini

Kevin Martini | NMLS 143962 | Certified Mortgage Advisor and Producing Branch Manager | Martini Mortgage Group at PCL Financial Group (powered by Celebrity Home Loans, LLC NMLS 227765) | 507 N Blount St Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | Kevin@MartiniMortgageGroup.com | nmlsconsumeraccess.org |Equal Housing Lender

This article has been written by Certified Mortgage Advisor and Raleigh mortgage broker Kevin Martini for informational purposes only and does not constitute legal, tax or financial advice.  Please consult with a qualified tax advisor for specific advice pertaining to your situation.  For more information on any of these items, please reference IRS Publication 946 and IRS Publication 527.