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[00:00:00] Welcome back to the What's Your 1 More podcast. I'm your host Quinton Harris. You're dialed in for episode 233 [00:00:05] It's kind of amazing when we think about that then we had a big week Obviously Super Bowl is happening [00:00:10] on Sunday.
[00:00:10] If you're listening this episode on Monday, we're recording here Friday the 7th and If you're [00:00:15] a Kansas City fan and you won, congratulations. If you're an Eagles fan, you won. Congratulations. We don't know the outcome yet, but [00:00:20] nonetheless, it's jobs week. Lots of stuff to talk about. This is a pivotal week.
[00:00:23] We've been talking about jobs over [00:00:25] inflation. So this is kind of a preview of things to come. And so what does that mean? This is what we're going to see in [00:00:30] the form of rate reductions from the feds. So we're going to talk about possibilities. We're going to talk about lower interest rates. [00:00:35] We're going to talk about the job market.
[00:00:36] What's it mean and why is it relevant? All of that and more in this [00:00:40] episode of what's your one more.
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[00:00:47] All right. So welcome back. As we get started is obviously [00:00:50] Superbowl Sunday is coming up. And if you're listening to this, it's already passed. And I think of this like kind of a cool moment [00:00:55] here, you know, growing up as a kid, obviously the Superbowl was a big thing and it still is a big [00:01:00] thing, but some irony in the Superbowl is, uh, My parents got me this video that like [00:01:05] highlighted all of like the first, you know, 18 Super Bowls, but inside of there, it [00:01:10] talks about the creation of the Super Bowl.
[00:01:11] And I thought this was timely. You know, the Super Bowl was actually named after Lamar [00:01:15] Hunt, who was the owner, ironically, of the Kansas City Chiefs. And he used to have one of these [00:01:20] toy Super Bowls that he would bounce around and that he had gotten for his children. And it became a popular [00:01:25] toy. And thus became the name of the Super Bowl.
[00:01:27] Thought that was pretty interesting. Most people don't know that, [00:01:30] um, for super Sunday there. So kind of lead with that. So let's talk about jobs weeks, get in here and kind of, [00:01:35] you know, what that entails, what that means. You know, we talk about falling interest rates. We talk [00:01:40] about the federal reserve. We talk about the mindset and ultimately we talk about what does that mean for real estate?
[00:01:44] You know, [00:01:45] clarity on this show for me is an absolute, you know, I look at people that are first time homebuyers and, you know, [00:01:50] the fact that the average first time homebuyers ages. That's just crazy to me. And you could market, [00:01:55] uh, many different things and say, Oh, it's interest rate, it's affordability, it's lack of inventory.
[00:01:59] [00:02:00] Um, you know, income, it all goes on, but it really all comes down to jobs, right? Because if you can't afford [00:02:05] the product because of the job and, and the monthly payment, then that's typically going to be an issue [00:02:10] rates do impact that. And so do the price, but the income in the household is also very, very important.
[00:02:14] And that's [00:02:15] why jobs weeks is so important because we get. Many different readings that come through we have a jolts report [00:02:20] which is a job opening and leave report that comes out We've get the adp which is like the [00:02:25] payroll company. You're very familiar with them. They determine the private sector jobs We'll talk a little bit about that And then [00:02:30] you have the ultimate the bls report which I often refer to as the bs report on here because we know it has Its [00:02:35] major flaws and inside of that is a household survey that gives us the unemployment rate So [00:02:40] major readings all come out this week and the reason that's important is because the federal reserve has taken the [00:02:45] stance that It's labor over inflation.
[00:02:47] I mean, you're going to see next week's inflation [00:02:50] week. That's the start of it. We're going to see those numbers come down. Matter of fact, they're probably going to come [00:02:55] down significantly because there's that shelter component that's been lagging for so long is starting [00:03:00] to catch up and some more real numbers are coming in the form of real rents, more real time rents are [00:03:05] going to start showing up and really bring that number down.
[00:03:07] And that's going to be a win. And so what [00:03:10] we were hoping for, you know, if you're on my side of the table and if you're a first time home buyer, you know, a homeowner that's locked in, [00:03:15] we've been hoping for these rates to kind of get some relief this week was kind of important because we've had [00:03:20] some momentum going in out of this fed meeting from the commentary from pow, we talked about last [00:03:25] week, going into jobs week.
[00:03:26] And then we had some wins on inside the job week, and we [00:03:30] also had a mixed bag of reports that happened actually today with the BLS. But the reason I think [00:03:35] this was a win is that the private sector, um, which is the ADP report was followed by the [00:03:40] Jolt report. And the Jolt report shows, in my opinion, something that really is telling that's [00:03:45] going on.
[00:03:45] And so in the job openings report, what that means is, uh, postings open, how many [00:03:50] jobs are available, right? And so if there's a lot of jobs available. People at [00:03:55] that point will start evaluating. Am I happy where I'm at in my current employer? And can I make more money to go to another [00:04:00] employer? So when those openings are high, such as they were during, you know, the parts of 21 [00:04:05] and 22, people start evaluating Well, if my company's not gonna pay me X because I want [00:04:10] more income so I can afford more I'm gonna go to company Y.
[00:04:14] Well during that [00:04:15] time the job openings was around 12. 1 million The reading that just came in [00:04:20] is 7. 3 million. So there's a significant difference there, meaning there's less job availability. [00:04:25] So theoretically, when you see something like that, that means more people are staying at their current [00:04:30] job because employers are not hiring for other positions that are not available.
[00:04:33] So when we look at jobs re [00:04:35] weeks, that's less creation of jobs. Typically that's good for the bond market check. We're seeing a [00:04:40] win there because the bond market says, Ooh, that's. That's a tightening of the labor market. That's not a great [00:04:45] sign and that's what the Federal Reserve was warning about. So we kind of saw that come in and that was a good thing.
[00:04:49] Then the ADP [00:04:50] private sector came in and it came in higher than expectations. And as you know, if you listen to the show, anything that comes in [00:04:55] above expectations, not really great for the market, but the argument could be made. How many of these postings are [00:05:00] double postings, right? So, and I think work from home makes that significantly [00:05:05] more, uh, telling.
[00:05:06] For example, if I have a job. that I'm posting for in [00:05:10] Florida, but I allow you to work from home. I may post that job in Indiana, Tennessee, [00:05:15] you know, uh, Texas. It doesn't matter because I'm going to post it all over in areas because people [00:05:20] can work from home and do that job. But that's showing up as for postings that I would have just described.
[00:05:24] So [00:05:25] there's some, there's some, uh, discrepancies in those numbers as well. And so it really wasn't [00:05:30] too much of a shock to the market to see that. And then Thursday's, uh, jobless claims [00:05:35] report came in and it was higher than expected. Again, a win for the bond market. So the momentum's building [00:05:40] to this BLS report we got today.
[00:05:41] And so the reason this one's important is because we get that big official unemployment [00:05:45] number. And I think that that's important because we've been talking about the Federal Reserve and their mindset and they said, Hey, [00:05:50] listen, if this thing gets to 4. 3, it's currently at 4. 1. We're concerned. 15 of the 19 members [00:05:55] said, we're concerned today was kind of a mixed bag because what we did was we had a [00:06:00] number that came in that was way below expected.
[00:06:02] You know, it was expected that this, that these BLS, which [00:06:05] is the nonfarm payroll came out and would have created 170, 000 new jobs. It created [00:06:10] 143, 000. There was a lot of adjustments in there. And one of the biggest ones in there [00:06:15] was, uh, the, the, the monthly revisions prior to and
[00:06:17] there was things added into this [00:06:20] report that happened, I guess, in January when the Census Bureau numbers come out. And so one of the [00:06:25] major things on this was the unemployment rate, which is a household survey, right?
[00:06:28] And on the household survey, [00:06:30] it's exactly what it is. It's a calling of 60, 000 people. It's a household survey about Did they lose a [00:06:35] job? Did they get a job? And what does that look like? The other component on that is the [00:06:40] actual labor force and the participation rate the jobs created. But inside of this, they [00:06:45] took a new Census Bureau information and estimated that two million people entered the workforce.[00:06:50]
[00:06:50] Two million people entered the workforce. And then all of them got a job, which I thought was pretty interesting [00:06:55] because I just explained the job opening situation that that's not. That's not technically, you [00:07:00] know, sound, um, theory, right? So you're gonna take two million people, dump them in the [00:07:05] unemployment, and you're gonna say, hey, all of them got a job.
[00:07:07] So that impacts the total labor force and it impacts [00:07:10] the jobs. So it's actually stating that there were more jobs created than the labor force, thus [00:07:15] bringing down the unemployment rate. From 4. 1 to 4. 0.
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[00:08:20] So the household survey, the challenge with it is that it's clouded by this new census data. So for [00:08:25] example, they're adding in this survey over 2 million people to the labor force due to immigration [00:08:30] and the larger number were counted as employed of that 2 million.
[00:08:34] So the challenge [00:08:35] we have here is that the household survey showed that there's 2. 23 million jobs created because they [00:08:40] added all of those new findings into the month of January. And so when in fact, There [00:08:45] weren't that many actual jobs created. And for anyone that will listen, I've said, I do not think the unemployment rates [00:08:50] really 4.
[00:08:50] 1. I think it's more closer to like 4. 4, 4. 5. This really didn't help that [00:08:55] argument, right? Because of these numbers that were dumped in there. And this is, again, this is January's [00:09:00] information showing up here in February, but. The reality is, um, they're saying the labor force [00:09:05] increased by 2. 197, uh, million people.
[00:09:08] But again, the [00:09:10] labor force and the, and the actual jobs created don't match up. So because of that, you see a drop, right? [00:09:15] But this is a false drop. It's a false narrative. What's going to happen is that this number is going to pop in the [00:09:20] month coming up in the next reading, because it's going to say, okay, we can't just keep adding.
[00:09:23] That's things in there [00:09:25] like this, this, this census doesn't happen again in February, it's a one time thing. So I think that what you're going to see is this [00:09:30] number go from four to like a 4. 2, 4. 3 in the next report. And I believe that is going to be [00:09:35] just in time and just enough for the Federal Reserve to go, Hmm.
[00:09:38] All right. That's what we didn't [00:09:40] want to see as we go into this March Fed meeting. And again, there's a lot of things that can happen between now the [00:09:45] inflation is going to be on our side. We're going to see that, but I don't think inflation moves the needle nearly as much [00:09:50] as we're going to see the new job numbers come out in the month of February.
[00:09:53] And it was also noted, I [00:09:55] think this is important, in these job numbers, none of it included any of the job [00:10:00] losses potentially in California from the California fires. None of those showed up in that [00:10:05] number and that was specifically stated in the BLS report. I thought that was very interesting that they kind of [00:10:10] said, hey, we're not, we're not looking at that in these numbers right now.
[00:10:12] That's not in this data set, which means it's probably going to [00:10:15] show up in the next data set. And so. Why is that employment number so big because we know [00:10:20] labor overinflation and if the labor market starts to deteriorate We also know that if things start [00:10:25] to go the wrong direction on the unemployment number the Federal Reserve is gonna react You're going to start seeing [00:10:30] cuts.
[00:10:30] You're going to start seeing cuts in this March meeting, which is a big win for us But let's also not discount this. [00:10:35] I think the BLS survey It's kind of has its it kind of has this upward [00:10:40] skew if you may and I think this is important to understand So think about this household survey, right? Anytime you [00:10:45] survey somebody Number one, it's not 100 percent accurate.
[00:10:48] You're just kind of getting [00:10:50] how they feel at that time. And are they willing to accurately participate? Are they even willing to [00:10:55] participate? But what was interesting to me is this. Remember that was 2 million [00:11:00] immigrants that they're saying immigrants. So on this household survey of [00:11:05] undocumented individuals, I want you to think about this like undocumented, like how do they find those [00:11:10] numbers?
[00:11:10] If they're undocumented individuals, like how do you account for that? And if you do, are they even going [00:11:15] to say that they're not working? Like are they even going to answer the phone? I mean, how did, how do you document something [00:11:20] that, how do you get information from someone that's undocumented? So that's another reason I questioned this particular survey and how it was [00:11:25] done.
[00:11:25] It just doesn't seem to make a lot of. And so going through this, I [00:11:30] think this number is going to get adjusted like it always does. But I think going into next month, we're going to see the [00:11:35] real whammy, if you may, on this unemployment number, which is going to give us an opportunity to start [00:11:40] seeing the Federal Reserve make some, uh, very favorable moves here.
[00:11:43] Now, going back to the beginning of the [00:11:45] show here, you know, if you're, if you're a first time home buyer, right. Or you're a homeowner that's sitting there and [00:11:50] you're going, man, I've been locked in. I've been waiting. Like. When is this going to hit? [00:11:55] If you were to ask me like six, seven, eight months ago, I would say, Hey, what we're going to get is like a stair [00:12:00] step of interest rates.
[00:12:01] Like it's going to be a gradual step, right? I think we're [00:12:05] preparing for something that may be more of like a jump. It's not a cliff, but a jump. You know, [00:12:10] I think you're going to actually like, you know, when you, sometimes when you're in a hurry as a kid, you would want to go up the stairs quickly. You might [00:12:15] not step on the one in front of it might, might skip one or skip two and try to go up there.
[00:12:18] I think that's what we're going to see [00:12:20] happen here. on the interest rate side of things. I don't think it's unreasonable to see [00:12:25] a half point overnight happen on interest rates as we get into this, this March [00:12:30] and April seasonality. And I think it's going to stay there. You know, remember from our original forecast, we said, Hey, [00:12:35] something with a five handle on it will show up in the late second quarter, third quarter of [00:12:40] 2025.
[00:12:40] I think the stage is set. I think we couldn't have a better opportunity. I think you're [00:12:45] seeing all the pieces fall into place here. I think the economy is absolutely poised and [00:12:50] ready for those cuts. And I also think this is really important. At the end of the day, [00:12:55] the last thing Powell said on that podium was it is our stance to [00:13:00] comply with executive orders and policies of the President of the United States.[00:13:05]
[00:13:05] That couldn't be any more clear to me. Executive orders say to get affordability more [00:13:10] in line for home ownership. And the first way to do that is going to be lower interest rates. [00:13:15] And so, You know, I think we're starting to see, um, what I thought would be some butting of the heads [00:13:20] between the, the Trump administration and, and President Trump and Jerome Powell, maybe start to work together [00:13:25] a little faster than I thought.
[00:13:26] Um, and there's a lot of reason to think that that's going to start [00:13:30] happening in the month of March, and there's a lot of pressure coming down the pipeline. You're also seeing the U. S. [00:13:35] Treasury Secretary, uh, Besant make some critical key points in making [00:13:40] the, the, the actual bond market more favorable. For interest rates as well.
[00:13:44] It'll be very interesting [00:13:45] to see these pieces of the puzzle come together here, because I'm ventured to say, when we start talking about this in late [00:13:50] March, we start talking about this in April. My, oh my. How the economy could look different, especially on the mortgage [00:13:55] side of things and the real estate ownership side of things.
[00:13:57] So for those that have been waiting. Get [00:14:00] poised, get prepared for those that are in this lock in, start determining what your strike rate is like. That's [00:14:05] something we talk about all the time and lenders use this as a selling term, but I'm using it as a term inside of your [00:14:10] house to talk about, like, if you absolutely know that your rate, they're like, Hey, I'm comfortable if it gets [00:14:15] down to six and a half, six and a quarter, five, eight, seven, five, like lock that into your, your, your, your [00:14:20] lender's head and say, listen, when it hits here, lock me in or call me like, let's go from there.
[00:14:24] [00:14:25] Set the tone for that because there could be a chance, you know. History tells us back in 22 and 23 we got to [00:14:30] rates and they stayed there for all of I don't know two days and they left right so maybe we see that [00:14:35] again even though I think it'll be more of again it'll be a jump and I think it'll be maintained but there are going to be windows of [00:14:40] opportunities to take advantage of this and something else that I think is really relevant here as inventory [00:14:45] continues to stay depleted it's not at high levels that it needs to be at There [00:14:50] will be a time as that inventory upticks because of seasonality alone.
[00:14:53] And as we showed in our 2025 [00:14:55] forecast, anytime you're coming out of an election cycle, the seasonality is [00:15:00] amplified. The peaks are higher and the valleys are lower. Well, we're coming out of the valley and the peak [00:15:05] is on the rise. By March, we could be seeing the mid of that peak in June would be the height, meaning the [00:15:10] amount of transactions that are closed during that time.
[00:15:13] And what you want to do. As a [00:15:15] person looking to buy a home is you want to be on the front end of that peak. You do not want to be at the peak. You do [00:15:20] not want to be competing when so many people are in the market space trying to get a home with a limited amount of inventory. [00:15:25] You want to get in front of that curve.
[00:15:26] So take this time as an opportunity to plan for that and [00:15:30] take this time to prepare because once that first rate cut comes out from the Federal Reserve, that's when we're going to start [00:15:35] seeing the musical chairs of properties happen again and it'll feel it won't be, but it'll [00:15:40] feel. A lot like late 21 because people will be competing for the same amount of homes [00:15:45] that we're currently not getting right now, but all it takes is a little bit of rate movement and people are [00:15:50] going to get off the sidelines and it could be a rush.
[00:15:52] Plus combine that with tax return season, people will have more [00:15:55] money for down payments, cash on the sidelines. it all makes for a perfect recipe. If you're looking to be a [00:16:00] homeowner and if you're looking to sell, Oh my, you could get more for your home during that time than you would, let's [00:16:05] say later on in the year.
[00:16:05] So it could be a flurry of real estate and it could be a great opportunity if you're looking to buy a home, [00:16:10] take advantage of that, look forward to it on this rate cut that's coming up here in March. All right guys, if you like what you're hearing, please five [00:16:15] star review this podcast, check us out on our YouTube channel at what's your one more that's at what's your one more with the number one, we put all of our [00:16:20] charts and graphs in there.
[00:16:21] Um, big shout out to Brad over in Burbank, California, man spoke with you [00:16:25] the other day on the phone. I appreciate all the feedback you're giving us on the podcast and listening to us and [00:16:30] talking about how you appreciate what we're doing. You listen to it on the way into work when we drop them every Monday and Wednesday.
[00:16:34] So thank you [00:16:35] very much. Love that kind of feedback. Love the comments on YouTube as well. Uh, we, we hear what [00:16:40] you're saying. We work towards it and we're trying to get more stuff out there for you guys to have at your disposal. [00:16:45] Guys, till the next time, we'll see you at What's Your One More.
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