Housing Market Braces For Further Discounts ‘Soon’ As Mortgage Lenders, Home Sellers Cut Thousands of Jobs

Topline

Although the overall strength of the labor market continues to confound experts, the headwinds of rising interest rates, which are fueling a historic plunge in home sales, could soon lead to an eruption of more severe job cuts across the housing sector—which, along with the technology industry, has already seen firms lay off thousands of workers in recent months. To see also : ARHS: 5 defeated shares to improve home takeover.

Last week, home sales platform Opendoor blamed “one of the toughest real estate times in … [+] 40 years” as it laid off 550 workers, and Wells Fargo is reportedly looking at thousands of job cuts.

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Key Facts

Despite a stronger-than-expected jobs report on Friday, Pantheon Macro chief economist Ian Shepherdson says resilience is “likely to change over the next couple of months” as the impact of rising rates ripples through the economy, with sectors vulnerable to tax as a residence. On the same subject : Worst DIY Projects: 5 Home Improvement Jobs You Should Never Do Alone. among those expected to be hardest hit.

“It’s certain that layoffs will soon grow across the entire housing ecosystem,” Shepherdson says, warning that the struggles will be similar to those illustrated by well-publicized tech layoffs that hit giants Stripe and Twitter last week and could continue this week with parent Facebook Meta.

“The housing market has cooled as interest rates scare away new buyers,” explains Andrew Challenger of career services firm Challenger, Gray & Christmas, noting housing starts and permits both fell, as brokerage firm Redfin reports that existing home sales fell 35% in. the year to late October – the biggest drop since it began collecting data in 2015.

It remains extremely unclear how many jobs could be on the line, but already a rash of companies in the housing sector have begun implementing mega-sized layoffs, with home sales platform Opendoor last week saying it was cutting around 18% of its workforce, some 550 workers. , as the company navigates “one of the most difficult real estate times in 40 years.”

Lenders have also been hit hard: This summer mortgage giant LoanDepot announced thousands of job cuts, and Wells Fargo is reportedly looking to cut about 2,000 loan officers as mortgage volume is down 90% year over year.

“The changes we’ve recently made are the result of the broader tax environment and consistent with the response of other lenders in the industry,” a Wells Fargo spokeswoman told CNBC in a statement, adding that the bank “regularly” adjusts staffing levels to CNBC. to match market conditions.

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Crucial Quote

“Layoffs are still not rising – and the barrier to letting people go is probably higher than in previous cycles, given how much trouble companies have had rehiring people after the initial Covid shock – but that is likely to change over the next couple of months,” says Shepherdson. Read also : How Tim Allen Suspended For Home Improvement Season 9. . .

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What To Watch For

Home improvement giants Home Depot and Lowe’s are sure to give an update on how the housing market downturn has affected business when they report earnings next Tuesday and Wednesday, respectively.

Key Background

Rising prices have forced central banks worldwide to reverse pandemic-era policy measures aimed at bolstering markets — and the Federal Reserve’s rate hikes have hit the previously booming housing market particularly hard. New-home sales plunged to a six-year low this summer, and plunging mortgage applications suggest the slump will only get worse. Fed Chairman Jerome Powell has repeatedly alluded to the housing market’s “complicated situation” this summer, saying prices will cool as mortgage rates normalize at higher levels after remaining historically low during the pandemic.

Further Reading

Fed Chairman Jerome Powell – Haunted By The Ghost Of Paul Volcker – Could Tank The Economy (Forbes)

Housing Market Collapse: ‘Strong’ Slowdown In Home Prices As Warning Signs Become ‘Extremely Similar’ To 2000s Crisis (Forbes)

Labor Market Added 261,000 Jobs in October While Unemployment Climbed to 3.7% (Forbes)

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How do you know when layoffs are coming?

Your manager is not communicating with you. There are whispers of layoffs in the workplace. You had a bad review. An emergency meeting of all employees was scheduled.

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What will happen to mortgage rates in 2024?

Mortgage rates for the next 5 years When interest rates rise, so do mortgage rates. The average five-year fixed mortgage rate is forecast to rise 0.3 percent this year, rising to just over one percent next year, and over two percent in 2024.

How high will mortgage interest rates rise in 2023? But the upshot for homebuyers is that mortgage rates are expected to drop next year, Fratantoni said. MBA predicts mortgages to end 2023 around 5.4%. The average rate for a 30-year fixed rate is currently 6.94%, according to Freddie Mac.

Will mortgage rates come down in 2023?

The 30-year fixed rate averaged 6.94% last week compared to 3.85% a year ago. The MBA also expects rates to drop to 5.4% by the end of next year. So expect national home price growth to “flatten out” in 2023 and 2024, he said.

Will interest rates go down in 2024?

“If our Fed rate hike forecast is realized, mortgage rates are likely to ease slightly [in 2024] just as cooling inflationary pressures boost real income. A modest improvement in sales activity will follow, which will reignite home price appreciation heading into 2024,” the Wells Fargo researchers write.

What will home interest rates be in 2023?

“By the end of 2023, financial market participants expect the Fed to raise the Fed funds rate target by 175 to 200 basis points from current levels. That would translate into 30-year and 15-year mortgages at about 8.50 and 7.70 percent,†he says.

Are mortgage rates gonna keep going down?

Mortgage rates may continue to rise in 2022. High inflation, a strong housing market and policy changes by the Federal Reserve have all raised rates this year. However, if a serious recession occurs, we could potentially see a decline in mortgage rates.

What will mortgage rates be in 2025?

According to a recent New York Federal Reserve housing survey, mortgage rates are expected to be 6.7% (about where they are now) in early 2023 and will continue to rise. By 2025, consumers who participated in the survey expect the 30-year mortgage rate to reach 8.2%, which would be the highest since 2000.

What will 30-year mortgage rates be in 2023?

Averaged together, mortgage forecasts call for 30-year fixed rates at 7.0% and 15-year fixed rates at 6.42% in 2023.

What will mortgage interest rates be in 2026?

A monthLow-Highclose
Sep-202617.27-18.4117.87
Oct 202617.71-18.8118.26
New 202617.28-18.3417.81

Will interest rates come down in 2025?

That has now changed, with the average official expecting rates to climb to 4.4 percent by the end of the year and to 4.6 percent in 2023. After that, they expect rates to start falling, so that they are 3.9 percent by the end of 2024 and 2.9 percent in 2025.

What are interest rates expected to do in 2023?

Interest rate forecast. We project a year-end 2023 federal funds rate of 3%, compared to 4% for consensus. Additionally, our 2026 and long-term projection for the fed funds rate and 10-year Treasury yield is 1.75% and 2.75%, respectively.

Will car interest rates go down in 2023?

Economists said the Federal Reserve will keep interest rates high at least until the end of 2023. “I’m the bearer of bad news, but that news could turn into better news in the future,” Aleman said.

What will mortgage rates look like at the end of 2022?

Mortgage forecasts for the end of 2022 The National Association of Home Builders and the National Association of Realtors sit at the low end of the group, estimating that the average 30-year fixed interest rate will settle at 5.39% and 6.6% for Q4.

How high could mortgage rates go in 2023?

How high will mortgage rates rise in 2023? The experts we surveyed expect average 30-year mortgages to land between 5.0% and 9.31% in 2023 – a huge potential range. Predictions fall between 4.5% and 8.75% for the 15-year fixed mortgage rate.

How do I keep my employees from leaving 2022?

Table of contents

  • Offer Competitive Base Salaries or Hourly Wages.
  • Let Your Employees Work From Home.
  • Provide Flexible Scheduling and Reduced Work Days.
  • Encourage and Promote Work-Life Balance.
  • Recognize and Reward Your Employees for Their Work.
  • Create a Culture Employees Want to Be a Part of.
  • Build Employee Engagement.

How do employers try to retain employees? Because hiring new employees is much more expensive than keeping the ones you have. Professional development, flexible schedules, and a solid benefits package are three things that help with retention.

Why do employees stay with a company 2022?

Overall, job stability and performing meaningful work were cited as the two most important reasons why employees continue to stay with their companies.

Is the mortgage industry laying off?

The mortgage industry is facing a wave of layoffs starting in late 2021. Rising rates are reducing lenders’ output, forcing them to cut costs, mainly hiring employees to take advantage of the 2020 and 2021 refinancing.

Will layoffs come in 2022? Other notable companies with layoffs in 2022: Twitter layoffs: 50% of workforce laid off (November 2022) Zillow layoffs: 5% of workforce laid off (October 2022) Peloton layoffs: 12% of workforce laid off (October 2022) DocuSign layoffs: 9% of workforce laid off (September 2022)

Why are mortgage companies laying off?

The job cuts come as higher mortgage rates cut demand from homeowners to refinance their loans, and also reduced buying activity. Applications for home loans have plunged more than 60% this year, according to data from the Mortgage Bankers Association.

How are mortgage companies doing?

The mortgage industry is struggling with higher rates and a sharp drop in buyer demand. Rocket RKT, -3.07% says it has a plan to turn things around. There is turmoil in the sector. Volume of originations and refinancing plunged.

What will happen to the mortgage industry in 2022?

But mortgage rates are expected to rise in 2022, according to the Mortgage Bankers Association. An increase in interest rates from 3.1 percent to 3.3 percent could potentially happen as soon as the first quarter of 2022.

How are mortgage lenders doing?

According to the Mortgage Bankers Association, independent mortgage bankers earned more than $4,200 per loan in 2020, compared to a long-term average of $1,460. Since then, the market has “gently†changed. Mortgage rates go to 6% and there is no one left to refinance.

What is the outlook for the mortgage industry?

With mortgage rates expected to remain elevated, we expect refinancing activity to slow with refinancing originations declining from $2.8 trillion in 2021 to $747 billion in 2022 and $310 billion in 2023.

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