For Tickets & Game Times Click Here.
New Orleans City Park Festival Grounds
Friederichs Dr
New Orleans, LA 70124
September 24, 2022
10am – 6pm
$20+
Music Line Up:
Connie Collins Morgan
Imagination Movers
Katy Ray
Dave Jordan and the NIA
Grayhawk Perkins
Water Seed
Johnette Downing
Shamarr Allen
Dirty Dozen Brass Band
Click Here For More Information.
How will the Fed stop housing inflation?
The Fed is putting a halt to the Pandemic Housing Boom by selling bonds making the mortgage rates rise, and slowing the housing market down.
The current housing market has been deemed the Pandemic Housing Boom because of the rise in buyer demand during the pandemic. This coupled with historically low mortgage rates and super low housing inventory caused the home prices to rise drastically. The Fed hopes this will not be the case in 2023.
When the pandemic hit, the Fed started to purchase bonds making the mortgage rates drop to historical lows. The rising inflation has pushed the Fed to start selling bonds which will cause the mortgage rates to rise. Within the past six months, the average 30-year fixed mortgage rate went from 3.1% to 5.7%.
The rise in the mortgage rates has cooled off the rise in home prices. Unfortunately, it has also put a damper on many borrowers’ dreams of owning a home. Borrowers are having a harder time with the debt-to-income ratios and have lost their mortgage eligibility.
According to Zillow, home prices will jump an additional 9.7% between May 2022 and May 2023 instead of what has been seen over the past year of a rise of 20.4%. This slow down will still be double the average annual home price appreciation of 4.4%. Zillow has changed its views in the last few months cutting its price growth by 8.1% percentage points in the last four months. CoreLogic predicts a slower rise of only 5.3%, while Mortgage Bankers Association predicts a 3.1% and Fannie Mae a 3.2% increase.
“The trend appears to show that the market passed an inflection point for home values between April and May, transitioning from ever-hotter to somewhat-cooler price growth. This deceleration is a clear signal that buyers are dialing back their demand for homes in the face of daunting affordability challenges,” wrote Zillow economists in their latest outlook.
Some such as Capital Economics predicts home prices to fall 5%. This has only happened twice in the past
five years. Moody’s Analytics believes that there will be a 0% rise in some areas even seeing a 5% to 10% decline in home prices.
“Mortgage rates are rising and will reach 6.5% by mid-2023. As a result, mortgage payments as a share of income will exceed the peak seen in the mid-2000s. That will cut home sales, with existing sales ending 2022 more than 20% down from their end-2021 level. House prices will also decline as affordability constraints bite, but tight markets and a lack of forced sellers means we expect the drop to be relatively modest, with annual growth falling to -5% by mid-2023,” wrote Capital Economics in its latest outlook.
“The housing market has peaked. … Everything points to a rolling over of the housing market,” says Moody’s Analytics chief economist Mark Zandi.
Are rising home prices a wild card for the Federal Reserve?
According to an article posted by Bloomberg, the high home prices are a hitch in the Federal Reserve’s plans for the nation’s slowing economy. Many say that this is the worst inflation the country has seen in forty years. The Federal Reserve wants to put a stop to the inflation that is currently hurting our economy.
The change is planned to come around September of this year. The goal is to have its policy rate at a level it considers to be restrictive, putting further downward pressure on prices.
In order for this to happen there are several factors that have to align. The three biggest are the country needs to pay three months of declining core inflation, measured month-over-month, the rate of home price appreciation needs to slow down in market price gauges and energy prices need to stay contained. If this does happen, the Fed will be able to slow the rise in interest rates.
The reason the change will not happen until September or later is that Colin Powell wants to witness a slow down in inflation via several reports. The one thing that will stall this is the housing market. Why? Because housing inflation falls behind market prices by several months.
This means that when market prices slow down, the housing market will continue to rise for several months extending into 2023. The housing market is still going strong because of low invetnory.
