u/AskJosh_MortgageGuy

Yesterday I talked about why I think a lot of homeowners use the wrong math when deciding whether to rent out their current house. Looking at the monthly cash flow by itself doesn't tell you everything. Once you factor in principal paydown and appreciation, the return can look a whole lot better.

The flip side is those returns aren't guaranteed. Let's go back to yesterday's example. The house rents for $3,750 per month, the mortgage payment is $3,140, and you're making about $610 a month in positive cash flow. That sounds pretty good until you remember that expenses don't stay the same forever.

Property taxes go up (In NJ? NO...). Insurance goes up. Repairs get more expensive. Hopefully your rent goes up too, but those two things don't always move together. The point is that the $610 a month we talked about yesterday isn't guaranteed. Five years from now it could be higher, or it could be a whole lot lower depending on what happened along the way.

Then you have the stuff nobody can predict.

Maybe you go a month without a tenant. Maybe the AC quits in July. Maybe you need a new roof a few years sooner than expected. None of those things are unusual, but every one of them comes directly out of your pocket. It doesn't take much before an entire year's worth of profit disappears.

There's also the opportunity cost of leaving your equity tied up in the property. In yesterday's example, you had about $314,695 in equity after selling costs. If you sold the house and used that money as additional down payment on your next home, assuming a 6% mortgage rate, your monthly payment would be about $1,886 lower.

Or maybe you don't put it into another house at all. If that same $314,695 earned an average annual return of 10% invested in the S&P 500, it would grow to more than $816,000 over the next 10 years with compounding interest. That doesn't mean selling is automatically the right answer, but it's part of the math that should be taken into consideration.

The last piece is one that catches a lot of homeowners by surprise.

If the house is your primary residence today, you may qualify to exclude up to $250,000 in capital gains if you're single or up to $500,000 if you're married filing jointly. Convert that home into a rental and wait too long to sell, and you could lose some or all of that exclusion. To keep this tax-free status, you must have lived in the home for two of the last five years. Depending on how much your home has appreciated, that can become a very expensive tax bill that wasn't part of the original plan.

None of this means renting out your current home is a bad idea. For a lot of people, it's absolutely the right move. I just think it's worth looking at both sides of the equation. Yesterday was all about the upside. Today is about the things that can eat into those returns before you decide becoming a landlord is the right move.

There isn't a right answer for everyone. For some people, keeping the house as a rental is the better financial move. For others, selling it, taking the equity, and moving on makes more sense. It depends on your goals, your finances, and how much risk you're comfortable taking on.

One of the biggest reasons people decide to keep their current house as a rental is because they think they'll make money every month. That's not necessarily wrong, but monthly cash flow is only one piece of the puzzle. If you're trying to decide whether to sell or rent, you need to look at the complete ROI stack (return on investment - I guess I shouldn't assume everyone knows the acronyms).

Let's use a realistic New Jersey example. Your house is worth $800,000 and your mortgage balance is $425,000 (thank you Covid rate of 3.5%). That gives you $375,000 in equity, but you wouldn't actually keep all of that if you sold. After paying a 6% Realtor commission ($48,000), the New Jersey Realty Transfer Fee ($7,305), and about $5,000 to get the house ready for sale, you'd walk away with roughly $314,695.

That's the amount of money you're choosing to leave invested in the property if you decide to become a landlord. Now let's say the house rents for $3,750 a month and your mortgage payment is $3,140. Your monthly cash flow is about $610, or $7,320 per year. Based on the $314,695 you have invested, that's a 2.3% cash-on-cash return.

If that was the entire calculation, renting probably wouldn't look all that attractive. However. the complete ROI stack has three pieces.

Cash flow gives you $7,320 per year, or a 2.3% return. Principal paydown adds another $11,760 in equity over the course of the year, assuming about $980 of each monthly payment goes toward principal. Now your total annual return is $19,080, or about 6.1%.

Then there's appreciation. If your $800,000 home increases in value by 3% over the next year, that's another $24,000 in equity.

Add all three together and your complete ROI stack looks like this:

Cash flow: $7,320 (2.3%)

Principal paydown: $11,760 (3.7%)

Appreciation: $24,000 (7.6%)

Total annual return: $43,080 (13.7%)

Looking at only the monthly cash flow tells one story. Looking at the complete ROI stack tells a very different one.

Of course, these numbers assume everything goes according to plan. In my next post I'll go through the expenses and risks that can change this calculation in a hurry, because that's the part people usually underestimate.

Friday mortgage update...Wednesday and Thursday gave us a little heartburn, but a late rally yesterday cleaned up some of the damage. It was mostly quarter-end trading and hedging before the holiday weekend, so nothing I'm reading too much into. But technically today, we are worse than we were Monday.

Now for the important stuff...Have a great Fourth of July.

Drive safe. Don't argue with your family about politics. Don't be the guy relighting the one that "definitely didn't go off." If your buddy says, "I've done this a hundred times," take about ten giant steps backwards. If your buddy says, "Lean over a little closer, I think the fuse went out," you've chosen your friends poorly. If you find yourself staring down the end of a mortar tube trying to figure out why it didn't go off...today's probably not your day.

If you're at the Jersey Shore this weekend, good luck. If you're staying home, also good luck because your neighbor apparently bought enough fireworks to challenge the U.S. military. Get your dog some ear plugs.

See everyone next week.

My ticketmaster ticket time changed from 7:00 to 7:30 in the app for tonight. Nugs still shows 7. Makes sense to move it back to help with the heat but does anyone know for sure? Doesn't seem to be an announcement but Ticketmaster definitely shows 730 now.

When I started r/NJHomebuyers, I honestly had no idea if anyone would show up. Building a subreddit from scratch is a little like throwing a party and wondering if you're going to end up eating all the food yourself.

I know there are real estate subs with 50,000+ members, but 400 feels pretty damn good, especially considering we started at exactly zero. Well technically one I guess since I joined my own group right away.

Now let's get some more stuff posted. I don't care if it's a mortgage question, a house you're thinking about buying, a crazy Zillow listing, a renovation, an inspection horror story, a rant about property taxes, or just something weird you saw while house hunting. If it's New Jersey real estate related, throw it up here.

Thanks to everyone who's joined the group so far. Let's see how long it takes to hit 500. And feel free to invite or share anyone that may find this place useful (or funny, or just want to hate on NJ).

I don't think enough people realize how much being in the DMV changes the math on a VA loan. If you're PCSing here and already have a VA mortgage, don't assume your benefits are tapped out.

Depending on how much entitlement you have left, you may be able to keep your current home and buy another primary residence when you PCS to the DMV. Around here, that's more common than people think because our loan limits are so much higher than they are in most parts of the country.

People also tend to think figuring out remaining entitlement is a complicated VA formula. It really isn't. First, take the loan limit for the county where you're buying and multiply it by 25%. That's your total entitlement. Then take 25% of your original VA loan amount, and subtract it. Whatever is left is your remaining entitlement.

Let's say you bought a $400,000 home near Fort Cavazos using your VA loan. That used $100,000 of your entitlement. Now you get orders to the National Capital Region.

Because the loan limit here is $1,249,125, you have a much higher ceiling to work with. In this example, you could buy roughly an $849,000 home with no down payment while keeping your original house. That's one of the advantages of buying in a high-cost area. The higher loan limits give your remaining entitlement a lot more buying power.

Let's say you find the perfect house, but it's above what your remaining entitlement will cover. Most people immediately think that means they need 20% down or can't use their VA benefits at all.

You can still finance 100% of the purchase price up to your entitlement limit. For anything above that, you only need to put down 25% of the difference. You're not putting 20% down on the whole house. You're putting down 25 cents for every dollar over your entitlement limit.

You still have to qualify for the new mortgage of course. But if your plan is to keep your current home as a rental, that's another area where VA loans are flexible. The VA has some of the most borrower-friendly guidelines for using projected rental income from your departing residence, which can make qualifying for the new mortgage easier than people expect.

I've had this conversation enough times that I figured it was worth posting. If you're getting orders to DC, Maryland, or Northern Virginia, don't assume selling your current house is your only option just because you already have a VA loan. Spend five minutes figuring out your remaining entitlement first. You might have more options than you realize.

I mean, no one does. It does nothing for you. But that being said, you don't need 20% down to buy a home and that myth refuses to die.

PMI is insurance for the lender, not the homeowner (in case they need to take your home and sell it they can't lose money. Also, just keep paying your mortgage so they don't take your home. Follow me for more great financial advice). The good news is it usually isn't permanent. Once you build enough equity, it can often be removed from a conventional loan.

The next question I usually get is, "How much is PMI going to cost me?" Unfortunately, there's no one-size-fits-all answer. PMI is based on several things, including your credit score, your down payment, the size of the loan, and the type of property you're buying. Two buyers purchasing the same house can end up paying very different PMI premiums. Speaking of two borrowers, having two buying together also lowers your PMI.

The nice thing is you have more control over it than most people realize. Better credit generally means lower PMI. Putting a little more money down can lower it too. Even moving from 5% down to 10% down can make a noticeable difference in some cases. There are also loan programs where the lender pays the PMI in exchange for a slightly higher interest rate. Sometimes that's a good strategy. Sometimes it isn't. It all comes down to the numbers.

Here's why I bring this up. I've had buyers tell me they're going to wait until they have 20% saved because they don't want PMI. That's not automatically the wrong decision, but it isn't automatically the right one either. In New Jersey, where home prices have a bad habit of continuing to climb while you're trying to save, waiting another year or two can cost more than the PMI would have.

That's why I don't like blanket advice like, "Never pay PMI." Sometimes avoiding it makes perfect sense. Other times, paying PMI for a few years gets you into a house sooner, starts building equity sooner, and ends up being the better financial move. If someone tells you that you should never pay PMI, they're giving you a one-size-fits-all answer to a question that doesn't have one. Sometimes avoiding PMI is the right move. Sometimes buying sooner is.

Happy Friday! Well...that was a nice change of pace.

We finally had a week where the good days outnumbered the bad ones. That's been a little rare lately. Usually we have one ugly day, then spend the next three or four business days slowly getting it all back. By the time Friday rolls around, we've basically run a marathon just to end up where we started. This week we actually finished ahead, even if "ahead" still means we're right back in the same trading range we've been bouncing around in for the last month.

Yesterday was another solid day for mortgage bonds. Inflation came in pretty much where the market expected, and rates improved through the morning. We gave a little of it back later in the afternoon after headlines that Iran had attacked a cargo ship in the Strait, but the reaction was pretty muted compared to what we've seen lately. We still closed with most of Wednesday's gains intact, and after the last month or so, I'll take that without asking too many questions.

Today is shaping up to be pretty quiet. There isn't much on the economic calendar, and as I'm writing this we're opening almost exactly where we closed yesterday. That doesn't mean we're guaranteed a boring day, though. Quarter-end is next week, and that's one of those times where the big firms on Wall Street start moving money around. Sometimes rates move because of inflation or jobs data. Sometimes they move because somebody in a conference room decided it was time to rebalance a portfolio.

The average 30-year fixed is sitting around 6.53%, the average 15-year is about 6.12%, and the average 7-year ARM is around 6.23%. Personally, I still don't think giving up the certainty of a fixed rate is worth saving roughly a quarter percent. Once you factor in the mortgage interest deduction for many buyers, that spread gets even smaller.

Hopefully we can coast into the weekend without any surprises. It would be nice to spend a Friday talking about a good week instead of explaining why the market found another way to make things more interesting. Enjoy your weekend.

Every now and then I see someone say, "If home prices are so crazy, why don’t builders just build more houses?" Fair question.

Here’s part of the answer: because by the time a builder actually gets a shovel in the ground, the cost of government regulations, permits, fees, code requirements, delays, environmental studies, inspections, and every other hoop they have to jump through now adds more than $131,000 to the cost of a new single-family home. That number was about $94,000 five years ago.

So before the builder makes a dollar, before a buyer upgrades the kitchen to something they saw on Instagram and will still somehow never cook in, there’s already six figures of cost baked into the house. And if you live in New Jersey, none of this should be remotely surprising.

We’re a state that desperately needs more housing, while also being a state that makes it as difficult and expensive as possible to build it. Everyone wants more inventory until the second someone suggests putting it near their town. Then suddenly we all become amateur traffic engineers, environmental consultants, and historians of that one empty lot that apparently must be preserved forever.

That’s a big part of why “starter home” new construction barely exists anymore. If it costs this much just to get moving, builders are going to aim higher up the price ladder where the numbers actually work. They’re not doing it because they hate first-time buyers. They’re doing it because nobody wants to spend a fortune building a house just to lose money on it.

So yes, rates matter. Affordability matters. Property taxes matter. All of that matters. But if we’re talking about why home prices in NJ stay so stubbornly high, this is part of the story too.

We don’t have enough homes, and we’ve gotten very good at making sure fixing that problem is expensive.

I made a post last week about DC homebuyer programs, and by far the program I got the most questions about was the DC Tax Abatement. So here’s a deeper dive, because this one is super valuable and ironically the one that is missed the most by non-local lenders.

Despite the name, this is not just a future property tax break. If you qualify, the program can wipe out your recordation tax at closing, apply the seller’s transfer tax as a credit to you, and then waive your DC property taxes for up to five years after that. That’s what makes it such a big deal. There’s the upfront closing cost benefit, and then there’s the longer-term property tax savings on top of it.

On a $350,000 home, the estimated closing credit is $6,388 and the estimated total savings is $17,650.

On a $450,000 home, the estimated closing credit is $9,788 and the estimated total savings is $25,300.

On a $550,000 home, the estimated closing credit is $11,962 and the estimated total savings is $31,725.

Those total savings figures include the estimated five-year property tax abatement, based on an estimated tax bill for that purchase price.

A few important things to know, because this is where things get missed. This is not just for first-time buyers. The program is for buyers who will occupy the home as their primary residence in DC, and it can be used on condos and single-family homes.

There are income limits, and they’re based on current gross household income from all sources. So if someone in the household has bonus income, overtime, Social Security, investment income, etc., that can matter. In lending, mortgage companies often don't use income they don't need - but programs like this that have limits will find it and count it.

There’s also a purchase price cap. For now, the max sale price is $576,000. And if the property is in an Economic Development Zone, the income limits are higher, which can help more buyers qualify.

One other thing worth knowing - even if the property taxes are going to be abated after closing, lenders still qualify you using the full property tax payment when they calculate your debt-to-income ratio. So from a mortgage approval standpoint, you usually don’t get the benefit of pretending those taxes aren’t there.

Timing matters too. The application has to be submitted within 30 days of closing, and the settlement company is usually the one helping put that paperwork together. This makes it important to choose a title company that has a good rep when it comes to the tax abatement program - and I assure you they don't all.

This is one of those DC programs that can meaningfully reduce the cash needed to buy and lower the cost of owning the home for the first five years. But I think a lot of people hear “tax abatement” and assume it just means a modest break on future property taxes, when the closing cost savings can be a huge part of the benefit too. Not to mention you don't have to go through all the craziness of HPAP with the class, etc. If you qualify, you can just get it.

https://preview.redd.it/xg0xvc2ug98h1.png?width=305&format=png&auto=webp&s=5080c7f7580a9f7b64172c4d96e45446212bbb9c

MSG x2, Holmdel, and MPP - hoping to remove 5 of these from the list! See you tonight!

I've been curious to see what Kevin Warsh's first Fed meeting would look like ever since he got the job. Not because I thought we were getting a rate cut this week. Nobody really expected that. I was more interested in how he would talk about inflation, the economy, and where he sees things going from here.

If you're a homebuyer hoping the new Fed Chair was going to immediately start pushing rates lower, this meeting probably wasn't what you wanted to hear.

The Fed left rates unchanged, which was expected. What wasn't as encouraging was the overall tone. Warsh spent a lot of time talking about inflation and seemed far less interested in talking about future rate cuts than the market would have liked. If Wall Street was looking for a warm hug, it got a firm handshake and a reminder to eat its vegetables instead.

He also continues to be a believer in reducing the Fed's balance sheet over time instead of expanding it. That's not exactly something that comes up during happy hour, but it matters. For years, the Fed was one of the biggest buyers of mortgage-backed securities. The further they move away from that world, the less support there is for mortgage rates.

For NJ buyers, I don't think this changes anything overnight. Mortgage rates are still going to react to inflation reports, jobs data, Treasury markets, oil prices, and whatever geopolitical headline shows up five minutes after I finish writing this. At this point, trying to predict the next rate move feels a little like trying to predict what my kids are going to eat for dinner. I can have a theory. Reality usually has other plans.

What I do think it does is reinforce what we've been seeing lately. Over the last month, rates have felt like a yo-yo riding an escalator. Lots of daily ups and downs, but the overall direction has been a little higher. Zoom out further and it's a different story. We're still very much in the same general range we've been bouncing around in for quite a while. The frustrating part is that every time it feels like we might finally break lower, something comes along and reminds us why mortgage rates enjoy ruining everyone's day (ok not everyone but those in the industry and homebuyers gutsy enough to float their rate).

Could that change? Absolutely.

But if you were hoping the new Fed Chair was going to walk in and start talking about a bunch of rate cuts, this meeting felt a lot more like "let's deal with inflation first and worry about the rest later."

There are a handful of first-time buyer programs in DC that don't get nearly enough attention. Some can reduce closing costs, some can help with a down payment, and some can do both. These programs can often get overlooked especially if you are using an out of state lender. If you're planning to buy in DC, they're worth knowing about before you start writing offers.

First and most common is the DC transfer tax reduction. Eligible first-time buyers can have the transfer tax rate reduced from 1.45% (or 1.1% depending on price) to 0.725%. On a $600,000 purchase, that's about $4,350 less needed at closing.

The DC Tax Abatement Program can be even more significant. Depending on the property and eligibility requirements, it can eliminate the buyer's transfer tax, provide a credit related to the seller's transfer tax, and reduce property taxes for up to five years. On a $400,000 purchase, that can amount to roughly $8,700 in savings at closing before factoring in the property tax benefit.

HPAP is probably the best-known DC assistance program, and for good reason. Eligible buyers can receive up to $206,000 in assistance through a deferred loan that can be used toward down payment and closing costs. There are income limits and other requirements, but the amount of assistance available is much larger than most people expect (of course funds run out often).

DC Open Doors is another program worth knowing about. It can help cover the minimum down payment requirement through a second loan with no monthly payments. Depending on the situation, it can significantly reduce the amount of cash needed to buy a home.

Most of these programs have been around for years, yet a surprising number of buyers have never heard of them (and shockingly real estate agents and lenders). If you're planning to buy in DC, it's worth spending a few minutes seeing whether any apply to your situation.

I saw an article this morning saying the income needed to afford a typical home has been falling, both nationally and here in New Jersey. According to the report, the magic number nationally is now about $117,000 a year.

As a mortgage guy, whenever I see these affordability studies, my first question is always: "Okay... but what assumptions are they using?" Because income by itself doesn't tell us much.

Let's take that $117,000 income. That's about $9,700 per month before taxes. A lender might allow a total debt ratio around 50%, which means you could potentially spend about $4,865 per month on all monthly debt. Sounds pretty good so far.

Then reality shows up. Let's say you have a $500 car payment. Maybe $200 in credit card minimums. Maybe $250 in student loans. Nothing crazy. Pretty normal stuff these days. Now you're down to roughly $3,900 available for housing.

The average property tax bill in NJ is around $10,500 per year. Figure another $150 a month for homeowners insurance and now your actual mortgage payment is closer to $2,900. At today's rates, that supports roughly a $450,000 mortgage. Which honestly isn't terrible.

The problem is this is New Jersey.

A $450,000 mortgage and a $450,000 house are not the same thing. In a lot of areas, that buyer is still going to need a healthy down payment to make the numbers work. So I don't necessarily disagree with the article. Affordability has improved a bit from where we were a year ago.

I just think affordability studies sometimes make it sound like income is the only thing that matters. Meanwhile half of us are driving around with car payments that look suspiciously similar to a mortgage from 20 years ago.

What do you think? Does $117,000 feel like enough income to comfortably buy a home in NJ today? Because to me it doesn't. You can check out the article here.

I purposely waited a little longer than usual to post this update because the story looked very different depending on when you checked. Had I written this yesterday afternoon, it would have sounded like everything was fantastic. Had I written it first thing this morning, it would have sounded like the wheels were coming off. A few hours later, we're somewhere in between.

Yesterday was a genuinely good day for rates. Markets reacted positively after a much stronger announcement regarding a potential peace agreement in the Middle East. Stocks rallied, oil prices dropped, and mortgage bonds improved enough that most lenders were able to pass along better pricing.

This morning started with more optimism after reports out of Iran added details to the proposed agreement, including discussion of U.S. forces withdrawing from the region. Then came the pushback. The deal isn't finalized. No signing location has been announced. No signing date has been announced. Various reports suggested portions of the agreement are still under review.

So here we are again.

The market still seems to believe we're closer to a deal than we were a few weeks ago, which is why most of yesterday's improvement remains intact. At the same time, nobody seems willing to fully buy in until there are actual signatures on actual paper.

That probably leaves us where we've been for months now: reacting to headlines as they come out.

As of today, the average 30-year fixed rate is around 6.60%, the average 15-year fixed is around 6.15%, and the average 7-year ARM is around 6.25%.

For anyone considering the ARM route, a 0.35% difference isn't moving the needle much for me. After the tax adjusted math is done, that's not a lot of savings for taking on additional risk.

The good news is rates are still holding onto most of yesterday's gains. The bad news is we've all seen this movie before. One headline can make rates look dramatically better. Another headline a few hours later can undo it.

At least this week we go into the weekend in better shape than we started it...he said at 10:30 AM knowing damn well there is plenty of time for chaos.

I was running numbers on a DSCR loan this week for one of my agent partners who owns several investment properties, and it brought up something that surprises investors all the time. In many cases, the rates are actually better (and some people don't even know what they are).

The concept is actually pretty straightforward. With a conventional investment property loan, the lender spends a lot of time looking at you. Your income. Your tax returns. Your debt ratios. Your assets.

With a DSCR loan (debt service coverage ratio), they spend a lot more time looking at the property. All we need to know is, can the rent support the payment? That's it (well not really, you need a decent credit score and to have money for a down payment).

Because let's be honest, we've all seen situations where someone owns multiple rental properties, has plenty of money in the bank, and has been filing tax returns that make it look like they're surviving on ramen noodles (the self-employed bring out creative accounting at it's best). Conventional underwriting doesn't always know what to do with that.

One thing that surprises a lot of investors is the down payment side of the equation. Most conventional investment property loans really prefer 25% down. You can go lower, but once you start talking about 20% or 15% down, the rates and fees can get ugly fast.

With DSCR loans, 20% down and good credit can often get you surprisingly competitive pricing. In some cases, better than conventional financing with the same down payment.

Of course there's a catch. There's always a catch. Most DSCR loans come with a prepayment penalty. So if your business plan is "buy it today and refinance it next month," you'll want to read the fine print. For the right investor, though, they can be a really useful tool.

Especially in NJ, where buying an investment property sometimes requires the budget of a small nation and the patience of a kindergarten teacher.

Any investors in here using DSCR loans right now?

Question for New Jersey homeowners: If you could pick up your current house and move it anywhere else in New Jersey, where would you put it?

You don't get a bigger house. You don't get a nicer house. You don't get waterfront property (that's cheating - pretty sure most of us would plop our homes down to an oceanfront view). Just your exact house in a different location.

I feel like when most of us buy a home, we think we know what matters. Then we actually live there for a few years and learn things we never considered. Maybe you wish you were closer to a train station. Maybe farther from one. Maybe closer to a downtown. Maybe you realized having land is overrated. Or maybe you want more of it.

So...would you move your home if you could?

Here is the thing about the New Jersey housing market right now. Because inventory is basically nonexistent, a lot of people are getting desperate. And when buyers get desperate, a very specific type of predator starts to thrive in our suburban wild. I am not talking about corporate landlords or predatory lenders. I am talking about the ghost flippers.

You know exactly who I mean. They bought a 1950s split-level in Middlesex or Union County four months ago for $500K, put six thousand dollars into it, and just listed it for $850K as a turn-key designer masterpiece.

If you spend more than five minutes online, you can spot their work from space. It is a very distinct aesthetic. Everything is painted a shade of gray that can only be described as hospital corridor. There is fresh, cheap grey vinyl plank flooring slapped directly over ninety-year-old sagging floor joists. And of course, they knocked down a wall because everyone wants open concept, completely ignoring the fact that the house is now slowly imploding because that wall was holding up the second floor.

The problem is that these houses look amazing in photos. The lighting is bright, the staging furniture from Wayfair looks modern, and the description uses words like luxury and curated. But when you actually walk through the front door, the illusion shatters. You realize the brand new stainless steel appliances are a brand you have never heard of and are currently leaking. The beautiful subway tile in the bathroom looks like it was installed by an angry toddler who was running out of time.

What they are doing is cosmetic camouflage. They are spending all their money on things that show up well on an iPhone screen while completely ignoring the things that actually matter, like the thirty-year-old roof, the electrical panel that belongs in a museum, or the foundation crack that you could fit a sandwich through. They hide the water damage in the basement with a quick coat of drylok paint and pray it does not rain until after closing.

The reason this is happening so much in New Jersey right now is because they know they can get away with it. Buyers are so exhausted from losing out on ten straight bidding wars that when they see something that looks done, their brains just shut off. They waive inspections because they think the house is perfect, only to move in and realize they bought a lipsticked pig with a crumbling main sewer line.

If you are out there looking right now, you have to look past the staging. Look at the corners. Look at where the baseboards meet the floor. If the floor looks like a wave pool but the vinyl is brand new, run. If the kitchen cabinets look incredible but they hit the refrigerator door when you open them, run faster. Do not let a three-hundred-dollar light fixture from Amazon trick you into buying a house that needs eighty thousand dollars in structural engineering.

It is a brutal market out there, but you do not have to be the person who pays a premium to inherit someone else’s half-baked weekend project. Rant over...(brought to you by someone who spends Mondays hearing about the weekend inspections, and prepares for another week of people talking about waiving them)

If you've been following my Friday updates lately, you've probably noticed a pattern. Up a little. Down a little. Up a little. Down a little. That was pretty much this entire week. We weren't really getting better or worse. We were just bouncing around enough to make everyone motion sick while ending up in basically the same place.

Then the jobs report came out this morning. Economists expected about 85,000 new jobs to be added in May. Instead, the number came in at 172,000.

That's a much stronger labor market than expected, and the bond market's reaction was immediate. Bonds sold off, mortgage bonds got hit, and rates are looking a bit worse than they did yesterday. (In the time it took to type this, things got even worse).

The logic is pretty simple. If the economy keeps creating jobs at a healthy pace, the Fed has less reason to cut rates. Markets don't love that if they're hoping for lower mortgage rates.

Now, it's still early. We have a couple hours before most lenders issue rate sheets, and markets can change their minds faster than a buyer who just lost their fifth bidding war. But if you floated into today hoping the jobs report would help us out, this isn't the number you were looking for.

We'll see how the day plays out, but as of this morning, things don't look great.