[JVM Lending Blog] 4% Rates by June?

The following blog is from my friend Jay Vorhees at JVM Lending. I’ve contributed some of my own insight at the very bottom. Enjoy!

I am always hesitant to predict rate-increases because they so often do not come about. But, because rates have increased over 1/2% over the last few months and because Barry Habib of MBS Highway predicted that increase with amazing accuracy, I listen when Habib predicts additional increases. And that is what he did in his recent commentary and in an interview with economist, David Rosenberg.

BAD NEWS = INFLATION

How Interest Rates Affect Property Value - The Paratto Team

Credit: The Paratto Team

Both Habib and Rosenberg believe inflation numbers will spike up over the next few months. They focus on Consumer Price Index (CPI) numbers, and point out that the CPI is a moving average of the last twelve months of inflation reports.

Hence, we won’t see inflation spike until April, May and June when the price increases we have seen in recent months start to get factored into the average. CPI numbers were in fact released today, showing a 1.7% increase over the last 12 months.

Habib and Rosenberg believe, however, that CPI numbers will be 1% to 2% higher by June, and that will no doubt spook the bond markets and push rates significantly higher. This is because no bond investor wants to be stuck with a 1.6% yield if inflation rates are at 3%.

GOOD NEWS = INFLATION IS SHORT-LIVED

Habib and Rosenberg also both believe that the inflation we will see will be short-lived. This is because they both think the price increases we are seeing now are primarily a result of supply chains being broken because of COVID.

They remind that the same vaccines and potential herd immunity that are freeing up spending and potentially spurring inflation are also the same vaccines that are also opening up supply chains.

They think the benefits of opened supply chains will outweigh upward pressures on prices brought on by increased spending, and we will see tamer inflation numbers later in the year. Rosenberg also points out that all of the government borrowing taking place now is also deflationary.

NO MELTDOWN; PRAGMATIC; ANYTHING COULD HAPPEN

30-year mortgage rates hit highest since July, refis cool | Fox Business

Credit: Fox Business

What I most enjoy about old salts like Mr. Rosenberg is how pragmatic and relaxed they are. The blogosphere is filled with “doom and gloomers” who insist “the end is near” because of our government’s unprecedented and massive monetary and fiscal intervention.

Rosenberg, however, believes those fears are overstated, pointing out how the Japanese central bank and government have been far more activist over the last twenty years without suffering any major consequences.

Rosenberg is finally quick to point out that there is still no certainty with any prediction in today’s volatile world, and he is particularly adamant about not trying to time predictions.

CONCLUSION

Rates will very likely continue to rise over the next few months b/c of inflation concerns. They could also fall again, but there is no guarantee.

Kristin’s two cents:

I also listened to a Barry Habib Zoom call in early February. One of the other things he noted is as debt increases, interest rates decline. What stood out is the current U.S. debt is around $28 trillion. If you decreased it by $1 million a day, it would take about 2,700 years to fully pay it off. The current administration is currently looking a more debt with their infrastructure bill. The good news is if rates go back down and you are just getting into a loan, you can always refinance down the road.

One last thought: The Wall Street Journal just reported that there are more real estate agents in the United States than houses on the market, but that will be a blog for another day!

Fun facts for St. Patty’s Day!

Happy St. Patrick’s Day, everyone! Under normal circumstances, this would be a happy day full of beer-drinking, block parties, and lots and lots of green outfits. The pandemic has put a bit of a damper on that, but we can still have some virtual fun. Here are 13 fun facts about St. Patty’s Day from MentalFloss!

St. Patrick's Day parade in New York City, 1960
A picture of New York City’s St. Patrick’s Day parade, circa 1960.PETER KEEGAN/GETTY IMAGES
  1. We should be wearing BLUE on St. Patrick’s Day: apparently, the color green only became associated with the holiday after it was linked to the Irish independence movement in the late 18th century.
  2. St. Patrick wasn’t Irish: what?! Although he made his mark by introducing Christianity to Ireland in 432, Patrick was actually born to Roman parents in Scotland or Wales in the late 4th century.
  3. St. Patrick’s Day used to be a dry holiday: pubs were closed in Ireland and Northern Ireland on St. Patrick’s Day until the 1970s. Before then, it was a solemn, strictly religious occasion.
  4. NYC’s St. Patrick’s Day Parade has been happening since 1762: one of the world’s largest parades was actually canceled for the first time in its history due to COVID-19 in 2020.
  5. Chicago runs green for St. Patty’s Day: you’ve all seen it – the Chicago River has been dyed green on St. Patrick’s Day every year since 1962 (but won’t be this year).
  6. Some St. Patrick’s Day parades are…different: from 1999-2007, the Irish village of Dripsey hosted a 26-yard St. Patrick’s Day parade between two pubs. Today, the shortest one is in Hot Springs, Arkansas (98 feet).
  7. There’s a meaning behind the shamrocks: according to Irish legend, St. Patrick used the three-leafed shamrock (not a four-leaf clover, by the way), as a metaphor for the Holy Trinity when he introduced Christianity to Ireland.
  8. Credit where it’s not due?: in Irish lore, St. Patrick gets credit for driving all snakes out of Ireland. However, modern scientists suggest that Ireland has never been home to any snakes because the island was too cold to host reptiles during the Ice Age, and the surrounding seas have kept them away ever since.
  9. Corned beef, hold the corn: corned beef, a popular Irish-American staple on St. Patty’s Day, doesn’t have anything to do with corn. The name is a nod to the large grains of salt historically used to cure meats, which were also called “corns.”
  10. St. Patrick’s Day is a bar owner’s dream: it was estimated in 2017 that 13 MILLION pints of Guinness would be consumed worldwide on St. Patty’s Day. In 2020, it was expected that American beer sales would be up 174% and that Americans celebrating would spend more than $6 billion on the holiday.
  11. His name wasn’t originally Patrick: hold on, what? According to Irish legend, St. Patrick wasn’t originally called “Patrick.” His birth name was Maewyn Succat, but he changed it to Patricius after becoming a priest.
  12. There are no female leprechauns: in traditional Irish folk tales, there are no female leprechauns. Rude!
  13. The lingo makes sense: you can’t attend a St. Patrick’s Day event without hearing a cry of “Erin go Bragh.” What’s the phrase mean? It’s a corruption of the Irish Éirinn go Brách, which means roughly “Ireland Forever.”
Green Chicago River on St. Patrick's Day
Every year, the Chicago River is dyed green for the holiday.TASOS KATOPODIS/GETTY IMAGES

Daylight Saving Time!

It’s that time of year again, folks! Tonight, we will spring forward one hour with Daylight Savings Time, so make sure to set your clocks before you go to bed tonight.

Here are 10 fun facts about Daylight Saving’s Time that you might find interesting:

The clocks will spring forward on March 14, 2021.
Credit: Getty Images/MentalFloss.com
  1. Benjamin Franklin was half-joking when he suggested a similar concept in a satirical essay.
  2. Official credit for the idea goes to a bug collector who was frustrated with the sun setting early in the summer, limiting his amount of time to catch bugs.
  3. Daylight Saving Time was pushed into law by World War I in a German effort to conserve coal.
  4. During the energy crisis of the 1970s, Daylight Saving Time gained renewed popularity in the U.S. as the government looked for ways to reduce energy consumption.
  5. Even though Daylight Saving Time was originally meant to save energy, research suggests it might actually be hurting the cause!
  6. Daylight Saving Time is actually bad for health, due to the one hour of extra sleep we lose by springing ahead.
  7. There is, however, a decrease in crime (robberies, especially) after the start of Daylight Saving Time!
  8. Though Daylight Saving Time has been widely accepted across the country, it is not mandated by federal law so, in Arizona, most of the state does not observe it.
  9. Daylight Saving Time begins at 2 a.m. in the hopes that the most amount of people are asleep when it occurs, therefore not messing with early work schedules and/or late restaurant and bar hours.
  10. Until 2007, Daylight Saving Time in the fall was on October 30th, right before Halloween; in 2007, the candy industry finally successfully lobbied Congress to move it to November!

Thank you for your support!

I’m proud to announce that I’ve received a Better Homes and Gardens Real Estate Platinum Award for 2020! It was certainly a crazy year for everyone in every industry, but it was a real estate year like none we’ve ever faced before.

So, I just want to thank everyone who has supported me, worked with me, bought or sold a house with me, and everything in between! I work hard for all of my clients and partners, and it’s nice to get acknowledged.

As you can see in the image above, the Platinum Award is given to Better Homes and Gardens realtors who close between 46-57 units and a total volume of $8-12 million. It was a rollercoaster year, where we had to learn different ways to work, not being able to work for a couple of months and 2021 is proving to also be a challenge for buyers and agents with limited inventory!

I have been doing this for 18 years and know the market will change, people are always on the move and rates will go up and down, thus the future looks bright (especially once the COVID market ends!), and I look forward to representing clients in the Bay Area for many more years.

New coffee shop just opened!

It looks like a new coffee shop just opened in downtown Walnut Creek! Good for them for opening during a lockdown, when so much is up in the air. I truly hope they do well! I saw their sign up in the Schroeder Insurance building a few weeks ago, but they hadn’t yet opened. I hav always admired this brick building it has such a cool architectural vibe, with the faux metal panels at the front entrance to the color of the bricks and now it is open for all to enjoy.

Now, according to their website and their Instagram, they are officially open for business, though at limited hours due to the pandemic (I’m guessing). The menu looks fantastic, and I really can’t wait to walk over and give it a try. Tellus Coffee is all about the healthy, good vibes. I mean, check out that plant wall!

That reminds me a lot of Rooted Coffee, which I’ve blogged about before. They found a brick-and-mortar home in Pleasant Hill after years at the Farmer’s Market. It seems like Tellus Coffee also has a ton of potential. Their menu includes everything from coffee to avocado toast to empanadas.

Here’s to hoping that COVID ends soon and we can all give Tellus a try indoors! For now it might just be grab and go. I know I’ll be placing a to-go order and visiting with my mask in the near future. I always love seeing what a new neighborhood coffee shop can offer our community!

A new mural at Mel’s

I wrote about the new mural in downtown Walnut Creek recently. What I did not go into detail on was that Local Edition also put up a mural outside of Mel’s Diner! Check out the pictures below – it’s a really interesting, visually stunning piece, in my opinion!

The installation outside of Mel’s was created by an artist at Local Edition named Masaka. According to the Local Edition website, “the canvas framework was inspired by whimsical 1950’s themed notes tying into the present day. The curvature and canvas layers throughout the art lures viewers in with curiosity as eyes start to wander from one layer to the next. The layers tell a story that is sometimes not conveyed through flat art. The tangible nature of the piece invites you into the artist’s process, build and passion with wonder.”

The artists has extensive experience in woodworking and carving precision from his days as a craftsman and dental technician, respectively. That experience, combined with a background in graffiti, led Masaka to this fusion of cutout pop art.

Local Edition writes that the purpose of the piece outside of Mel’s is to revitalize memories of the downtown Walnut Creek leisure experiences and incorporates landmarks from as far back as 1889, like St. Paul’s Chapel, El Rey Theater, Shadelands Ranch, the Lesher Center, and Century Theaters. Magnificent!