Back to my infamous “in box” I received an article from Housing Wire titled “Why is Fannie Mae optimistic about housing market recovery”. Once you get past the headline and look at the article it shows that 30-year fixed rates average 7.21% at the end of February; but then they say that “Fannie Mae however remains optimistic that housing market activity will pick up”. They then go on to tell us that existing home sales dipped by 1% to a seasonally adjusted rate of 3.78 million units, that there is a low supply of existing homes, and new permits inched up 1.6%. Hardly a robust prediction!

Depending on who you read, it could be either! Recent articles talk about the Fed’s desire to stay the course until inflation is more under control, others, such as Housing Wire said that the Feds are going to deploy rate cuts not because “the labor market breaking, but because real rates are too high”. And what does that have to do with us?

The “shelter inflation” is 44.4% of the consumer price index, so it is the most significant component. Back in December, the 10-year yield had fallen from its peak of around 5% to 4.2% which should have driven mortgage rates less than 6%, but they did not.

Marc Rowan is the CEO of Apollo Global Management and he did an interview recently where he discussed the struggles of regional banks with both the costs of funds and the regulatory costs they face in today’s highly competitive market.

Those of us who work in the regional markets understand the critical nature of these lenders as they provide a significant portion of the funding for local development. Mr. Rowan saw a potential second decline in certain commercial real estate assets, primarily office buildings, but thought that would be localized to the major cities.