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Is the Real Estate Boom Over?

Mortgage applications plummet 30% as real estate retrenches.

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Mortgage applications plummet 30% as real estate retrenches.

House hunting used to be so much easier.

For years, buyers looking for a new home were buoyed by low interest rates, a range of flexible options for mortgages, and a wide variety of housing from which to choose.

All those factors were put in place by regulators and local authorities hoping to jumpstart a rebound from the Great Recession.

For the most part, they worked. 

But in some places, they worked too well — creating a bottleneck of too many qualified buyers for too few homes.

That created a perfect storm for a sellers market that got hotter and hotter during the pandemic, when locked-down buyers decided en masse to look for different, permanent or larger homes.

Combine that with some buyers who were boosted by economic stimulus payments and one-time stipends provided by the federal government, and more buyers than ever were leaping into the real estate sector.

However, new data shows that those days are over. 

With recent actions by the Federal Reserve pushing mortgage rates above 5% or more, mortgage applications have dropped by a third.

realtor.com

Is The Real Estate Boom Over?

On June 22, the Mortgage Bankers Association puts out its survey of weekly mortgage applications, a closely watched metric of how engaged buyers have been in attempting to finance a new home.

Ralph DiBugnara, a real estate authority, mortgage executive and chief executive at Home Qualified, said that the new Fed hikes have affected specific parts of the market substantially.

"We've seen mortgage applications down about 30%," DiBugnara told TheStreet.

Homeowners looking to take advantage of low rates are now having to think again.

DiBugnara said that refinancing a property has become a major hurdle for some homeowners.

 "Refinancing has been the biggest drop off for mortgage applications, as well as the fact that some homebuyers have been priced out of the market," DiBugnara said.

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What Can Homeowners Expect Next?

The Fed's rate hikes are designed to cool down an inflation rate of almost 9%, which has been pushing prices up across a broad range of sectors and types of products.

So far it has already hit some parts of the real estate market. For the week of June 20, major cratering has appeared in the mortgage market.

"[The weekly mortgage application] index recently hit a 22-year low as refinancing demand plummeted as much as 75% from a year ago," Investopedia reported.

DiBugnara said said that can mean the difference between 3% and even 5% on a $455,000 mortgage [which] is about $500 a month.

When that major monthly cost is added to an increasingly expensive bill for staples like food and transportation, "most people can't afford $500 a month in addition to increased gas costs and other expenses."

"Most of that is due to refinancing not being an option at this point because most of the people that refinanced were able to do so between rates that were in the high two’s to low three’s," he said. "Right now, rates are in the fives and approaching 6%."

He said higher rates and inflation are mixing to create a cocktail of unfavorable economic conditions for both buyers and lenders.

"These are the two reasons we've seen a big drop off in applications,"  DiBugnara said.

"The mortgage market in general is going to be down over a billion dollars in loans closed this year compared to last year," he said, predicting even further dips in that index's numbers.

"This is a significant number, and I believe we’re going to see mortgage applications continue to drop," DiBugnara said.

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Economics

Expert on Bath & Body Works: ‘an easy double the next three years’

Bath & Body Works Inc (NYSE: BBWI) might have been painful for the shareholders this year, but the road ahead will likely be a rewarding one, says…

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Bath & Body Works Inc (NYSE: BBWI) might have been painful for the shareholders this year, but the road ahead will likely be a rewarding one, says the Senior Vice President and Portfolio Manager at Westwood Group.

BBWI separated from Victoria’s Secret

The retail chain separated from Victoria’s Secret in 2021, which, as per Lauren Hill, clears the way for a 100% increase in the stock price in the coming years. On CNBC’s “Closing Bell: Overtime”, she said:

[Bath & Body Works] has really strong pricing power. They have 85% of their supply chain in the United States and with the Victoria’s Secret brand now gone, I think it’s a wonderful buy; an easy double the next three years.

Last month, the Columbus-headquartered company reported results for its fiscal first quarter that topped Wall Street expectations.

Bath & Body Works is a reopening play

The stock currently trades at a PE multiple of 6.64. Hill is convinced Bath & Body works is a reopening name and will perform so much better as the world continues to pull out of the pandemic. She noted:

Customers have missed buying their scented products in store and as their social occasion calendars fill up, they are getting back out there and buying more gifts, including Bath & Body Works products.

Hill also dubbed BBWI a great pick amidst the ongoing inflationary pressures because of its reasonably priced products. Shares are down more than 50% versus the start of 2022.

The post Expert on Bath & Body Works: ‘an easy double the next three years’ appeared first on Invezz.

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Economics

Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Authored by Naveen Anthrapully via The Epoch Times,

A…

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Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Authored by Naveen Anthrapully via The Epoch Times,

A majority of C-suite executives are considering leaving their jobs, according to a Deloitte survey of 2,100 employees and C-level executives from the United States, Canada, the UK, and Australia.

Almost 70 percent of executives admitted that they are seriously thinking of quitting their jobs for a better opportunity that supports their well-being, according to the survey report published on June 22. Over three-quarters of executives said that the COVID-19 pandemic had negatively affected their well-being.

Roughly one in three employees and C-suite executives admitted to constantly struggling with poor mental health and fatigue. While 41 percent of executives “always” or “often” felt stressed, 40 percent were overwhelmed, 36 percent were exhausted, 30 percent felt lonely, and 26 percent were depressed.

“Most employees (83 percent) and executives (74 percent) say they’re facing obstacles when it comes to achieving their well-being goals—and these are largely tied to their job,” the report says. “In fact, the top two hurdles that people cited were a heavy workload or stressful job (30 percent), and not having enough time because of long work hours (27 percent).”

While 70 percent of C-suite execs admitted to considering quitting, this number was at only 57 percent among other employees. The report speculated that a reason for such a wide gap might be the fact that top-level executives are often in a “stronger financial position,” due to which they can afford to seek new career opportunities.

Interestingly, while only 56 percent of employees think their company executives care about their well-being, a much higher 91 percent of C-suite administrators were of the opinion that their employees believe their leaders took care of them. The report called this a “notable gap.”

Resignation Rates

The Deloitte report comes amid a debate about resignation rates in the U.S. workforce. Over 4.4 million Americans quit their jobs in April, with job openings hitting 11.9 million, according to the U.S. Department of Labor. In the period from January 2021 to February 2022, almost 57 million Americans left their jobs.

Though some are terming it the “Great Resignation,” giving it a negative connotation, the implication is not entirely true since most of those who quit jobs did so for other opportunities. In the same 14 months, almost 89 million people were hired. There are almost two jobs open for every unemployed person in the United States, according to MarketWatch.

In an Economic Letter from the Federal Reserve Bank of San Francisco published in April, economics professor Bart Hobijn points out that high waves of resignations were common during rapid economic recoveries in the postwar period prior to 2000.

“The quits waves in manufacturing in 1948, 1951, 1953, 1966, 1969, and 1973 are of the same order of magnitude as the current wave,” he wrote. “All of these waves coincide with periods when payroll employment grew very fast, both in the manufacturing sector and the total nonfarm sector.”

Tyler Durden Sat, 06/25/2022 - 20:30

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Spread & Containment

Optimism Slowly Returns To The Tourism Sector

Optimism Slowly Returns To The Tourism Sector

Coming off the worst year in tourism history, 2021 wasn’t much of an improvement, as travel…

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Optimism Slowly Returns To The Tourism Sector

Coming off the worst year in tourism history, 2021 wasn't much of an improvement, as travel remained subdued in the face of the persistent threat posed by Covid-19.

According to the United Nations World Tourism Organization (UNWTO), export revenues from tourism (including passenger transport receipts) remained more than $1 trillion below pre-pandemic levels in 2021, marking the second trillion-dollar loss for the tourism industry in as many years.

As Statista's Felix Richter details below, while the brief rebound in the summer months of 2020 had fueled hopes of a quick recovery for the tourism sector, those hopes were dashed with each subsequent wave of the pandemic.

And despite a record-breaking global vaccine rollout, travel experts struggled to stay optimistic in 2021, as governments kept many restrictions in place in their effort to curb the spread of new, potentially more dangerous variants of the coronavirus.

Halfway through 2022, optimism has returned to the industry, however, as travel demand is ticking up in many regions.

You will find more infographics at Statista

According to UNWTO's latest Tourism Barometer, industry experts are now considerably more confident than they were at the beginning of the year, with 48 percent of expert panel participants expecting a full recovery of the tourism sector in 2023, up from just 32 percent in January. 44 percent of surveyed industry insiders still think it'll take until 2024 or longer for tourism to return to pre-pandemic levels, another notable improvement from 64 percent in January.

Tyler Durden Sat, 06/25/2022 - 21:00

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