Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit” (CLL) value. Loans above this amount are known as jumbo loans.
Essex County is considered a high-cost area, and limits are higher than the base level set by the FHFA. For 2024, the CLL is $766,550 and for Essex County the limit is $862,500,
Which means that, with a 20% down payment, a property in a standard area costing just over $950,000 can be purchased with a conventional mortgage, and in Essex County that rises to well over $1 million.
This time last year, stocks were still in the gutter, inflation was in the stratosphere and Fed interest rates were going up, up, up. Today the S&P 500 has risen 17% since Jan. 1, the much-anticipated recession has yet to arrive, unemployment remains below 4% and consumers are still spending–Walmart, Target, and Gap all beat expectations this week.
Inflation has dropped to around 3%, not too far off the Fed’s 2% target. Walmart CEO Doug McMillon was talking about deflation in the coming months. Oil prices are below $75 a barrel, Airfares are significantly cheaper this year than they were for the holidays last year. Bond yields are dropping, too, as traders start to price in Fed rate cuts next year. The 10-year yield has dropped back to around 4.4% from as high as 5% in October. (Barrons)
On Thursday, Walmart CEO Doug McMillon said deflation could be coming as general merchandise and key grocery items, such as eggs, chicken and seafood get cheaper.
He said the retailer expects some of the stickier higher prices, such as the ones for pantry staples, to “start to deflate in the coming weeks and months,” too.
“In the U.S., we may be managing through a period of deflation in the months to come,” he said on the company’s Thursday earnings call. “And while that would put more unit pressure on us, we welcome it, because it’s better for our customers.”
“I think the most important observation we’ve made is that the worst of the inflationary environment is behind us,” Hone Depot, Chief Financial Officer Richard McPhail
The question now is whether the Federal Reserve, having been extremely slow to start raising rates and reversing Quantative Easing, will be similarly late in easing. The Fed claims to be data dependent, but data tells us what happened in the past – and the Fed’s actions impact the future.
“The Fed must lower rates to cause money suply to grow by 5% per year, consistent with the 2% inflation target.If the Fed waits until core inflation is 2% we could have a recession.”(Jeremy Siegel, Wharton) (more…)