Morning Report: Rental Growth Increases

Vital Statistics:

S&P futures4,443-33.2
Oil (WTI)84.87-1.93
10 year government bond yield 1.76%
30 year fixed rate mortgage 3.75%

Stocks are lower this morning after lead sled-dog Netflix stunk up the joint with earnings after the close yesterday. Bonds and MBS are finally having an up day.

Fannie Mae anticipates that 2022 will be establish a new “normal” for the housing market. The top-level view is that inflation will remain elevated for the year, and home price appreciation will slow to the high single digits. Economic growth will also return to longer term trends. GDP is expected to fall to 3.1%, home price appreciation will grow 7.6%, and inflation will start at 7% before slowing to 4%.

“We expect economic growth to continue slowing as the impacts of fiscal stimulus fade and the country’s attention increasingly turns to rising inflation,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “The Fed has accelerated the pace at which it intends to reduce monetary accommodation, as inflation appears more resilient than initially expected. Currently, we expect inflation to run above the Fed’s two-percent target through 2023, and for the Fed to respond by tightening over that period. The resultant rise in interest rates will likely put additional stress on housing affordability measures vis-à-vis higher mortgage rates for consumers and the continued, though decelerating, rise in home prices. While consumers still have a significantly elevated level of savings, the rate of saving has fallen such that, over time, we believe ‘excess’ saving will likely be eroded and affordability increasingly constrained. We observe an early indication of this in recent increases in debt-to-income measures associated with incoming mortgage originations.”

One of the bigger inputs to the inflation indices is home prices, although it tends to impact the index with a 12-18 month lag. Rental prices, along with owner’s equivalent rent are the vehicle. Rents are increasing at a rapid clip, according to Redfin.

The Index of Leading Economic Indicators rose in December, according to the Conference Board. “The U.S. LEI ended 2021 on a rising trajectory, suggesting the economy will continue to expand well into the spring,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “For the first quarter, headwinds from the Omicron variant, labor shortages, and inflationary pressures—as well as the Federal Reserve’s expected interest rate hikes—may moderate economic growth. The Conference Board forecasts GDP growth for Q1 2022 to slow to a relatively healthy 2.2 percent (annualized). Still, for all of 2022, we forecast the US economy will expand by a robust 3.5 percent—well above the pre-pandemic trend growth.”

24 Responses

    • Koskidz ready to mix it up with the Ruskies.

      Jan 21, 2022 at 11:03:52 AM
      I think KingSweden’s suggestion yesterday that NATO station bombers, fighter squadrons in NATO countries closest to Ukraine which can support the Ukrainian Army if a war breaks out is the best option.

      I’ll repeat my point from yesterday that Putin won’t stop unless NATO puts some skin in the game and makes it clear it won’t just be the Ukrainians who will be shooting back at his troops in a hot war. Also Xi Jinping is going to be watching very closely how NATO/US reacts if Russia invades Ukraine.


      • I’m so old I remember when the left flipped out over Grenada.


      • this is just residual from Orange Man Bad, right?

        who knew that all it took was one reality TV star who beat Clinton of all people to turn them into Bolton/Cheney types.


        • The other thing they can’t seem to grasp is that Republican cold warriors never hated the Russians per se. They were opposing communism as an ideology.


    • “The White House on Friday categorically disputed a media report that German Chancellor Olaf Scholz had turned down a last-minute invite from U.S. President Joe Biden to meet in Washington, adding that both leaders are planning to meet there next month.

      “This report is false. It did not happen — totally made up,” Adrienne Watson, a spokesperson for the White House’s National Security Council, said in a statement.”

      So dare I say Fake News?


  1. Interesting to read in retrospect, with some parallels to today.

    “Two Cheers For the ’70s

    By Garrett Epps
    February 25, 1979 ”

    Among other things, I think the writing quality is better than most of what you see today.


    • Yes, totally.


    • The quality is much better, also much more … cosmopolitan. Much more a sense of shared experience, of a sense that the country is more than your current group of Twitter followers.

      Also it’s fucking long, feels like there were multiple drafts, and that it was reviewed by more than one copy editor. But I have to imagine everything in WaPo in 1979 was done more professionally and maturely than now.


    • Bill Maher is a lefty and has always mocked the right, but has never been into the cognitive dissonance of the progressive cult, which is why be insulting to both Christians and Muslims because he understands Islam is far more repressive and hostile to liberal norms than Christianity.

      He was never going to follow contemporary progressives all the way up their own ass. It’s one thing to claim the mantle of scientific rigor when you have a consistent message and your claims can at least be massaged to comport with reality. Quite another when you start telling everybody that 2+2=5 and shut your whore mouth if you disagree.

      Maher has s lot of friends in s lot of spaces and doesn’t have to worry nearly so much about getting canceled. All cancellation would do is end up with him at somewhere like Daily Wire hammering the woke crazies that much harder while prefacing each attack with his support of gay marriage.


    • Hopefully the fever is breaking


  2. Ultimately, this is on Bush/Cheney and the failed war policies and protracted involvement in those wars in Iraq and Afghanistan. The world knows the US public is battle weary and will not support sending US troops, frankly, anywhere.

    There’s no amount of bluffing that will cover this. Our option, our only option, is to arm those under threat.

    And frankly, I have zero sympathy for Ukraine, arguably one of the most, if not the most corrupt countries on earth. Prolly be best of eastern Ukrainians to be under the less corrupt (though notably corrupt) Russian thumb.

    As far as Taiwan goes, their own population is pretty lackadaisical about joining the military, so why should Americans risk their own blood to defend something their own population won’t?

    Ditto Europe.


  3. JFC!


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