It is the holiday season. Some of us abstain from drinking alcohol, some of us don't. And among those that don't abstain, some drink a little and some drink a little too much, which often times results in, uh, inappropriate behavior and a hangover. For those interested in drinking and not becoming drunk, the latest "research" shows one teaspoon per beer, right before you start drinking, causes the alcohol to be broken down in the stomach instead of the liver so that it doesn't get into the blood stream and hence the brain.  Or not...

First-time home buyers, and many would lump Millennials into that category, are being squeezed in plenty of urban markets. (The median price paid in June for a new or existing single-family home or condo in San Francisco hit $1 million for the first time - how long does it take a 20-something to save up for that down payment?) Three thousand miles away rental prices in Manhattan have risen so much that potential renters are balking at the asking prices. Rental vacancies are at the highest level since 2006. In November, the median monthly rent in Manhattan rose to $3661, up 4% YOY.

A study by Harvard University finds people who spend more than 30% of income on rent (cost burdened) has risen to 21.3 million people. Of those, 26% spend more than 50% of their income on rent (severely cost burdened). This could be an ongoing issue when you consider 37% of households rented last year, the highest level in 45 years. And the number of households spending more than 50% of their income on rent could reach 13.1mm in the next 10Ys and more than 25% of renters are already at that level. In more normalized conditions, the income percentage is around 25% to 30%.

A recent survey of American homeowners and renters released by Harris Poll on behalf of ValueInsured found that while Americans embrace the dream of homeownership, the possibility of losing a hard-earned down payment is discouraging them from buying. More than half (55 percent) of renters are confident they will get their down payment back if they were to buy today and have to sell in the next 2-7 years. If Americans were to trust their down payment to be protected than 63 percent of renters said they would be more likely to buy a home sooner if they could have the option to buy down payment protection, whereas 31 percent of existing homeowners said they would be more likely to buy a new home. Down payment protection would give more people confidence in buying, according to 81 percent of renters and 67 percent of homeowners. Roughly 78 percent of renters believe it's important to own a home or to become a homeowner again, and 9 out of 10 Millennial renters say it's important to one day own a home or to become a homeowner again. The majority of renters (70 percent) said they would purchase down payment protection if they decided to buy a home, and 32 percent of homeowners and 49 percent of Millennial homeowners would have purchased down payment protection if it was an option when they bought their home.

RentRange published a ranking of the top cities that experienced the largest rental rate increases between the third quarter of last year and the third quarter of this year. The data indicates that cities in the South and West generally had the greatest increase in home rental rates, whereas cities in the Midwest and Northeast did not experience such a large increase. Markets in the central U.S. and Midwest often generated higher yields than markets in California and Florida as well. Cape Coral-Fort Myers Florida had the greatest change in rent at 23.6 percent along with Sacramento, CA (17.6%), San Francisco, CA (17%), Charleston, SC (16.5%), Los Angeles, CA (16.3%), Denver, CO (14.6%), Dallas, TX (14%), San Diego, CA (13.6%), Portland, OR (12.6%), Seattle, WA (11.9%) and Tampa, FL (10.3%).

Are incomes keeping up? Not really. Here's a story titled, "Six-Figure Income, but Still Need Help With Rent." Cities beyond New York and San Francisco-such as Cambridge, Mass., where median rents are $2,750 a month-are moving to set aside apartments for middle-income households.

As the cost of renting continues to rise, rental affordability worsens, making homeownership unachievable for many. The low interest rate environment has drawn new homeowners into the market, but often times, getting the best rate on a mortgage requires a significant down payment. A home buyer making the national median income of $54,990 and purchasing a median-valued home of $182,500 during the third quarter would expect to pay 15 percent of their income towards a monthly mortgage payment (assuming 20 percent down). If the same household chose to rent a typical home, they would spend 30 percent of their income on rent. Although a 20 percent down payment in one metro area is not the same in another. For example, in San Francisco and Sane Jose, a 20 percent down payment on median-valued home is more than $150,000, whereas in Tampa, Florida a 20 percent down payment is closer to $25,000. Keeping up with rising rents while saving for a down payment requires income growth, as the share of income needed to afford median rent has increased in 28 of the 35 largest U.S. metros over the past year. Not only does stagnant wage growth and rising rents make saving for a down payment nearly impossible, the potential rate hike in the coming months will be another hurdle to cross for those looking to buy.

Owning is more affordable than renting. This is the recent report that Goldman Sachs came out with and found that for a typical 30-40 year old, it is still cheaper to own than to rent. Goldman Sachs utilized the GS Housing Affordability Index (HAI), which focuses on homebuyers who can afford a 5 percent down payment and who have to pay mortgage insurance. It's no surprise that over the past eras, the cost of rent has risen. In 1980, 1990 and 2000, renters used to spend one quarter of their income on rent, now that share just jumped to one third. Real rent jumped 30 percent from 1980 to 2013, which is less than 1 percent annual average growth, but during this same time period, real income for renters remained stagnant, indicative of elevated rental burden. To examine income and rent more closely, Goldman Sachs used the median income among 30-40 year olds (both homeowners and renters), mainly because this is the age group of when people transition from renting to owning. Then they compared the rent paid by 30-40 year olds for 2-bedroom multi-family rental units with the monthly CPI rent. Their findings identified that these two data points were closing aligned; therefore the CIP rent was used to measure rental affordability. Using this method, Goldman Sachs' research indicates that from the early 1990s to 2000s, buying a home with a mortgage was more affordable than renting, then in the mid-2000s when home prices were overvalued, renting was less expensive. After the financial crisis, owning was once again, more economically favorable than renting. As of now, the share of income that would be allocated towards owning is 23 percent compared to 26 percent for renting. Owning should still be cheaper than renting over the next year as lenders ease credit standards and demand should drive improvements in housing starts and home sales. Even with a slight increase in interest rates, owning should still be more affordable and cause minimal impact on the housing market.

WHOOPS, you've been relocated again. Did you buy or rent your home planning on being moved around again and again? How long does it take to just suck it up and buy a home vs. renting a home? According to Zillow Real Estate research, the national average is 1.9 years as the breakeven point when buying a home becomes financially better for your wallet than renting a home. They take into account all of the common costs including down payments, security deposits, taxes and fees. They also considered the fact that if you rented a home you would have more money to invest in stocks and bonds that they assumed earned 5% annually. However, they also say that if you're really living in a place for a short time (depending on your definition of short time) buying a home often requires very large upfront costs and taxes, which would make renting better.

According to Zillow, buying remains a better bargain than renting at the end of the second quarter. Home values and rents have seen an increase, as the median home value has risen 3.3 percent and median rent has increased 4.3 percent. This means someone looking to rent the median-price home and making the median income should expect to pay 30.2 percent of their income each month on rent. Whereas homebuyers should expect to pay about 15.1 percent of their income on a mortgage for a median priced home. The average income share to support the rising rent prices is at the highest level ever, whereas the share of income needed to purchase a home is at all-time lows. The low interest rate environment is the main contribute to this but even if rates were to increase to 6 percent, home buyers should still expect to spend 30 percent or less of their income on mortgage payments. As rent becomes more unaffordable, many renters have difficulty saving money and those whose rent is most unaffordable are more likely to not have health insurance. Rental affordability has also worsened YoY in 28 of the 35 largest metro areas. To read more about Zillow's article, click here.

Switching gears to the capital markets, fixed-income securities here in the U.S. dipped a little Tuesday - mostly attributed to oil prices gaining some ground. The yield curve steepened with every benchmark yield spread widening.

Today's schmear of news perked some interest. We've already had the MBA's app numbers for last week (up over 7% - attributed to the clamor around the Fed's short-term rate change - with refis +11% and purchases +4%). We've also seen November's Durable Goods Orders and Durable Goods Orders ex-transportation (flat last month) and November Personal Income, Personal Spending, and PCE Prices (Income +.3%, PCE +1.3%). Coming up are December's Michigan Sentiment figure and November New Home Sales. If you're trying to figure out where mortgage prices will be today (is anyone going to lock today with the holidays?) we closed Tuesday with the 10-year yielding 2.24% and this morning it is at 2.26% with agency MBS prices worse a smidge.

Jobs And Announcements

Radian, one of the industry's largest private Mortgage Insurance companies, is growing its sales team and "has an excellent opportunity for a seasoned sales professional. The Regional Director, New Business Development is responsible for pursuing and closing key sales opportunities in the South West market. We are looking for a dynamic individual who has experience in Mortgage Insurance and/or Correspondent Lending Sales. If you are interested in joining the Radian team we would welcome the opportunity to speak with you. Please send your confidential inquiry/resume to Sarah Keene."

In retail & call center news, "Guaranteed Rate is not your typical mortgage company. With 16 years of stability and growth we have tons of energy and love what we do: get people mortgages with low rates and wow them with impeccable customer service. Our Digital Mortgage is revolutionizing loan origination. GR has funded $18 billion so far in 2015 with 60% purchase business (+7% in 2015) and total production up 35%. We have 30 of the nation's top 200 originators in Scotsman Guide, with more originators than any other firm in the nation's top 1%. If you are looking to double your business in 2016, Guaranteed Rate is the place. We are interested in quality loan officers and branch managers. Guaranteed Rate has an immediate need for VP Call Center-Consumer Direct in Irvine, CA, experience is required. And national positions are available LOs. Contact Jeana Ziroli Kobielsky (949-233-5635) today."

In other personnel news, Impac Mortgage is reported to have had a lay-off of Operations and Sales personnel last Wednesday. The reason was rumored to be to cut cost in lieu of falling loan production in its correspondent division. The company, however, released this note: "Impac Mortgage Corp. has announced they are currently recruiting sales and operational personnel in an effort to expand both its Alternative Non-Delegated Correspondent channel and Wholesale channel. In an effort to increase efficiencies, Impac's Correspondent and Wholesale divisions have also undergone a reorganization in its lending platform to create a more streamlined client friendly experience, and is seeking qualified mortgage personnel with these correlating skillsets going into Q1 of 2016. As a highly successful, well-respected industry leader, Impac Mortgage Corp. correspondent and wholesale channels offer their entire comprehensive set of programs, products and services to its clients along with the benefit of product training..."