The Real Estate News Brief: 2 Great Reports on Inflation, Why BofA is Refunding Millions, Top 10 State Economies

In this Real Estate News Brief for the week ending July 15th, 2023... the best inflation news in a long time, why you might get some money back from BofA, and a ranking of state economies with two of my favorites at the top.   Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.   Economic News   We begin with economic news from this past week, and the big news came from two promising inflation reports. With a tiny .2% increase in June, the Consumer Price Index, or CPI, shows that inflation is slowing down. The June reading is down from a .3% increase in May, and brings the annual rate down from 4% to 3%. It’s the lowest rate of inflation we’ve seen since March of 2021.   The core rate of inflation, which omits food and gas, rose the same .2%, but the annual rate is still on the hot side. It’s currently at the 4.8% level. The core rate is considered a better gauge for price growth, and is still well above the 2% target the Fed is aiming for. But things are going in the right direction. (1)   The Bureau of Labor Statistics also reported good news for wholesale inflation. It says the Producer Price Index or PPI rose .1% in June and indicates that wholesale costs may have stopped going up. The annual rate has now slowed from 1.1% in May to just .1% currently, which is VERY close to zero.   The core rate shows the same monthly increase with an annual rate that is now 2.6%. Economists are still predicting that Fed officials will hike rates again at the next meeting despite these great reports, to make sure they’ve squeezed every last drop of inflation out of the economy. (2)   San Francisco Fed President Mary Daly more or less confirmed that view, saying that “It is really too early to declare victory on inflation.” She says she’s still in the wait-and-see mode. (3) Fed Governor Christopher Waller also spoke out after the CPI report saying: “The report warmed my heart, but I have got to think with my head.” He says he’s seeing two more 25-basis-point hikes by the end of the year. (4)   The weekly jobless report continues to highlight the strength of the job market. Jobless claims dipped again from a revised 249,000 to 237,000 last week. The decline may have also been impacted by the July 4th holiday, if workers didn’t apply for benefits right away. But the big picture shows that the job market is still going strong. (5)   Mortgage Rates   Mortgage rates are not doing what we’d like them to do. Freddie Mac says the 30-year fixed-rate mortgage was up 15 basis points last week, to an average of 6.96%. The 15-year was up 6 points to 6.3%. (6) The Mortgage Bankers Association reports that average rates were up in the 7% range, but decreased slightly after those reports on inflation. (7)   In other news making headlines…   Bank of America Caught Double-Dipping   Bank of America is doing damage control for millions of dollars worth of illegal transactions. The Consumer Financial Protection Bureau says that BofA allowed fees to be repeatedly charged for the same insufficient funds transaction, withheld credit card reward points and cash, and created unauthorized accounts to help meet sales-based incentive goals. (8)   BofA will be paying $100 million to repay customers for illegal fees or unauthorized account charges, and about $90 million in penalties. Customers don’t have to apply for this compensation. The bank will either deposit any money owed into customer accounts, or send checks to the account holders.   Lenders Offer Loan Tweaks to Help Commercial Borrowers   The commercial real estate crunch is easing somewhat with the help of banks trying to prevent defaults. Many of those loans are expiring, and refinancing has become a problem because of high interest rates. Real estate analysts say that banks are dealing with the situation by offering loan extensions and modifications, selling derivatives to fix interest costs, and offering subsidized loans to investors to purchase defaulted loans.   Analysts say that lenders are hoping that this will help tide things over until properties become more profitable and refinancing can take place with lower interest rates. And the data reportedly shows that it’s working.   As an example, a U.S. News article says that about $2.1 billion in CMBS office loans matured in May. That’s almost double the total amount that matured from January through April. A Moody’s report says that a little more than a third of those loans were modified or extended.   The default rate is currently at about 4% which is well below the projected 10%. Analysts are however, predicting that it could hit 6% by the end of the year.   Best State Economies List Florida, Texas at the Top!   This last story is about the top 10 U.S. state economies, and the two top ranking states are at the top of my list for investors. According to CNBC’s America’s Top States for Business study, Florida leads the nation with a score of 340 out of a possible 360 points! GDP growth last year was 4%; job growth was 4.9%; and the debt rating and outlook was AAA according to Moody’s.   Texas was in the second position with a score of 324; a 2022 GDP of 3.4%; job growth at 4.8%; and a AAA debt rating and outlook.   That’s it for today. If you’d like to know about the other states on the list, check for a link to the article at newsforinvestors.com. You can also join RealWealth, if you haven’t already, for more data on various real estate markets, and how you can find rental properties that make sense for your long-term financial independence. And before you go, please remember to subscribe to this podcast, and leave a review!   Thanks for listening. I'm Kathy Fettke.   Links:   1 - https://www.marketwatch.com/story/u-s-inflation-slows-again-cpi-shows-as-fed-weighs-another-rate-hike-3c1628c5?mod=economic-report   2 - https://www.marketwatch.com/story/u-s-wholesale-inflation-slows-to-a-crawl-ppi-shows-83855be2?mod=economic-report   3 - https://www.marketwatch.com/story/feds-daly-says-it-is-too-early-to-declare-victory-on-inflation-ec25249a?mod=federal-reserve   4 - https://www.marketwatch.com/story/feds-waller-unimpressed-by-inflation-data-calls-for-two-more-rate-hikes-this-year-9946b29e?mod=economy-politics   5 - https://www.marketwatch.com/story/jobless-claims-drop-to-237-000-and-point-to-still-strong-u-s-labor-market-f4826b74?mod=economic-report   6 - https://www.freddiemac.com/pmms   7 - https://www.mortgagenewsdaily.com/markets/mortgage-rates-07122023   8 - https://www.consumerfinance.gov/about-us/newsroom/bank-of-america-for-illegally-charging-junk-fees-withholding-credit-card-rewards-opening-fake-accounts/   9 - https://money.usnews.com/investing/news/articles/2023-07-12/analysis-banks-step-up-u-s-property-loan-tweaks-to-limit-defaults   10 - https://www.cnbc.com/2023/07/13/these-10-states-are-running-americas-best-economies-for-residents.html