Wednesday's Scoop: Ruminating☀️

Hey friend - welcome back to your scoops.

Here’s what you need to know today to inform your work, spending, and investments:

1. Mortgage costs are soaring again.

2. Several states passed laws to control rising property taxes.

3. The cost of living keeps rising, just not as quickly.

Inflation Rate: +2.6% (YoY), +0.2% (MoM)
^{Policymakers aim for 2% YoY inflation. (October CPI)}

Living costs are still getting more expensive, just not as quickly. The Bureau of Labor Statistics reported that the Consumer Price Index (CPI) increased by 0.2% in October, bringing the annual inflation rate to 2.6%. Core inflation, which excludes volatile food and energy prices, also rose by 0.3% and is now 3.3% higher than a year ago. A significant part of this increase came from housing costs—rent and other shelter expenses—which continue to climb. Prices at the pump kept dropping, and there was some discounting in apparel, but grocery costs kept inching higher. While this is a much more normal level of inflation that policymakers like to see, nothing seems to be getting more affordable.

30yr Mortgage Rate: 6.9%
^{That’s down from 7.6% a year ago. (MBA)}
Median Home Price: $404,500
^{That’s up from $393K a year ago. (Existing Homes, NAR)}

Mortgage rates are rising again, making it more expensive to borrow to buy a home. According to the Mortgage Bankers Association, the average interest rate for a 30-year fixed-rate mortgage increased to 6.86% last week, reaching the highest level since July. This increase comes as investors consider the economic implications of President-elect Trump's upcoming term and the strain it might put on the government’s already-soaring debt. The government’s borrowing costs are the baseline, so as treasury bond rates rise, so do all other borrowing costs. While applications to purchase homes rose 2% for the week and are just 1% higher than the same week last year, applications to refinance fell to their lowest level since May. Rising mortgage rates increase the monthly cost of homeownership, deterring buyers and stalling home sales.

Voters in several states have passed measures to reduce property taxes to ease homeowners' financial burden. Eight states approved initiatives on Election Day to offer property tax relief, including Georgia, which capped tax assessment increases for current homeowners at the rate of inflation. Property taxes have surged due to rising home values, with local governments collecting $363.3 billion in property taxes on single-family homes in 2023—a 6.9% increase from the previous year and the largest jump in five years, according to property data firm Attom. These new measures could help make owning a home more affordable by slowing the growth of their property tax bills. However, some experts caution that these caps might shift the tax burden to new buyers and reduce funding for local services, so it's essential to understand how these changes could affect your specific community.

The Market: ⬆️ +0.02%
S&P 500: 5,985.38
1Mo: +2% | 1Yr: +36% | 5Yr: +92%

The market didn't move much on Wednesday. Investors have shifted from exuberance around deregulation and lower taxes to questioning the potential impact of President Trump's proposed policies on inflation and the national debt. Concerns about the country's ability to manage its ballooning debt have pushed borrowing costs higher.