RE Market Memo

Welcome to the Fidelis Wealth Builders’ RE Market Memo!

The RE Market Memo is a short summary of key real estate market data available for you to instantly get clarity on the market trend without getting lost in the noise of fake news, YouTube clickbait, or data overwhelm.

You can quickly be the smartest person in a real estate conversation by spending a few minutes on this page each week.

Summary

If you only have 30 sec 

The national supply (inventory) of houses for sale remains growing on seasonal pace (still well below pre-pandemic level),  Mortgage Interest Rates remain in high 6.9% range, and again higher this week than last week.  Sales volume is higher this week than same week last year.   It seems mortgage rate stability is enough to increase sales.  Prices of new contracts are increasing, BUT the % of price reductions are increasing a bit. That is a leading indicator that there is downward price pressure with the growing inventory.  Prices are likely to remain stable, the exception always being if interest rates increase.  

“Imminent crash” is clickbait. (or ignorance)  While anything CAN happen, the odds are MUCH higher that prices continue seasonally upward, especially in starter homes.  (The exception is a total monetary failure of our currency).  

If you have 2.5 more minutes then see below:

Key Stats: (from our friends at Altos, Housingwire, Jason Hartman, Joe Manussa, and others)

Last week’s SFH Inventory on Market: 513,000 (altos)
This week’s SFH Inventory on Market: 526,000 (30% higher than same wk last yr) 

Listing volume – 67,000 new listings is 32% Higher than this same wk last year.

Sales volume – 69,000 new contracts is 10% Higher than this same wk last year.

This Week’s price reductions are UP to 32.1% = Low, (normal is 30-35%).
(A leading indicator of buyer demand strength, and home price direction)

Last Week’s Median Price of Homes in Contract: $395,000
This Week’s Median Price of Homes in Contract: $389,000 (1% higher than same wk last yr)

Last Week’s SFH Median Home Price: $440,000
This Week’s SFH Median Home Price: $447,000 (1.7% higher from same wk last yr)

Housing Vacancy Rate: 6.6% – very low (quarterly)

National vacancy rates in the fourth quarter 2023 were 6.6 percent for rental housing and 0.9 percent for homeowner housing. The rental vacancy rate was higher than the rate in the fourth quarter 2022 (5.8 percent) and virtually the same as the rate in the third quarter 2023 (6.6 percent). Source

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If you want to see how you can do it, watch this short training I did here.

It walks through exactly where we go to buy, and there are real-life examples of student deals so you can see just how much you can make when you get the right deals.

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MORTGAGE RATES & APPLICATIONS 

Because the current market relies HEAVILY on the CHANGE in mortgage rates, we’ve added this section. 

The average rate on a 30-year fixed mortgage soared to 7.1% as of April 18th, 22bps above the previous week to the highest since November, according to data from Freddie Mac. The result was in line with the sharp rise in long-dated Treasury yields amid the increasingly hawkish expectations for the Federal Reserve. In the corresponding period of the previous year, the average rate on a 30-year fixed mortgage was 6.39%…… source: Trading Economics

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Mortgage applications in the US rose by 3.3% from the previous week on April 12th, pointing to some traction in mortgage demand following four consecutive weeks of muted applications. It was the sharpest increase in one month, despite the rising momentum in average mortgage rates due to the upswing in long-term US Treasury yields. Applications for a mortgage to purchase a new home rose by 5% to bounce from a similar-magnitude plunge in the earlier week, while applications for a mortgage to refinance a home edged up by 0.5%, extending the 10% surge noted earlier……..  source: Trading Economics

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DELINQUENCY RATE (as of Feb 2024)
We added this section to understand the leading indicator of borrower stress.  (It will lag behind a few weeks before the data is reported)

ICE First Look at Mortgage Performance: Delinquencies Improve and Foreclosures Drop as Prepayments Rise Modestly

-The national delinquency rate eased to 3.34% in February, down 4 basis points (bps) from the month before and 11 bps lower than in February 2023

-While the number of borrowers one payment behind rose modestly by 10K, those 60 days late as well as those 90 or more days past due both fell to their lowest levels in three months

-Delinquency inflows rose 6.5% from January’s eight-month low, while rolls to later stages continued their recent improvement

-Serious delinquencies (loans 90+ days past due but not in active foreclosure) are down 103K (-18%) year over year, with the population now standing at 459K

-Representing 5.3% of serious delinquencies, February’s 25K foreclosure starts is the second lowest in the last twelve months

-The number of loans in active foreclosure fell -7K to 211K, remaining 25% (-72K) below pre-pandemic levels

-6K foreclosure sales were completed nationally in February, a 9% decrease from the previous month and the second lowest level in the trailing 12-month period

-Prepayment activity rose 3 bps in February to a level not seen since October, as a brief dip in rates heading into the month provided a modest increase in refinance incentive

https://www.icemortgagetechnology.com/resources/data-reports/first-look-at-february-2024-mortgage-data

Fidelis’ Weekly Take:

— Inventory is growing on a normal pace given the interest rate stabilized.  The available housing inventory remains low in many markets, however, the southern markets are normalizing quicker.  Only 10% of markets have 4mos+ inventory, everything else is less, or a “Seller’s” market. A chart is on the Market Memo page showing the states inventory increases.

 Sales transactions are much strong this quarter than the record low Q1 last year.  What will happen in RE this year?
The big question is banking stress because the US owes 33 Trillion dollars in national debt. It was 10 Trillion in 2008.  We now pay more interest on debt than defense or medicare.  I hope that shocks you.  Are the BRICS nations going to get off the Dollar and go to gold or a digital currency? Those issues would destroy everything regardless of housing supply and demand.

 Passive income from RE is a shield for most of this, whereas “flipping” can stop at any time. (because it’s the same as a job). 

— Affordability – Almost all local markets historically less affordable 4th qtr of 2023. Among the 580 counties analyzed, 572, or 98.6 percent, are less affordable in the fourth quarter of 2023 than their historic affordability averages. That is almost the same as the 98.8 percent level of a year ago but double the 48.7 percent figure from the fourth quarter of 2021. Historical indexes have worsened since the fourth quarter of last year annually in 88.8 percent of those counties, pushing the nationwide index to its lowest point since 2007.

—  I frequently point out the word “probable” is more important and practical to live by than “possible”.  Do not let the wealth building power of owning real estate pass you by due to ignorance. There are no current indicators to say prices will crash any time soon.  There is only speculation on various economic variables that aren’t doing well right now. Until that speculation flushes itself out, the price of your next investment, or even your home, is likely going to rise HIGHER not lower.  Prices are increasing now on a seasonal pace.

– *** Housing Stock Growth Rate is 0.8% since 2009 – HALF of of the average the previous 30 years.  Total Housing Stock growth is NOT keeping pace with demand. This is also keeping the market in very low inventory compared to previous years.  This is why the “crash” word is hard to give credence to right now.

RE Investor Translation

— If you aren’t getting showings you are probably at the wrong price.  If showings aren’t producing offers, the house itself may have a problem such as insufficient level of repair. 

— Prices BELOW MEDIAN for any local area are holding best, we always buy at or below median prices because it means the biggest buyer pool.

— Real estate remains one of the best hedges to gain from an inflationary period.  Buying it at a discount, in local areas of increasing appreciation makes it an incredible ROI. (the best)

—  Rent prices may soften in some transient areas as homeowners who need to move and buy in another city for job/marriage, etc.. will decide the 3 – 4.5% mortgage is too good to give up and they rent the home instead of selling it. 

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I’ll continue reminding that a Seller becomes a Buyer or a Renter unless they 1 – die, 2- leave the country, or 3 – move in with parents/friends.  It will take 100s of thousands of those in rapid fashion to cause a problem of over-supply of housing for sale, and thus a price/rent drop and crash. 

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Issues affecting RE availability and price: (same as last wk)

— AirBnb is taking a hit as I said it would.  When inflation eats away everyone’s disposable income, vacation rents come down. Many BnBs are switching to Padsplit. I have several padsplits on the market now and the cash flow is double the regular rental $. 

— As for supply and demand – There is nothing to indicate a new-construction over supply, and so far a modest increase in foreclosure activity.  WE REMAIN VASTLY UNDERSUPPLIED FOR HOUSES. Until rates come down, which is unlikely, more people than every can’t afford to buy because their wage isn’t high enough for today’s rate, and they’re getting moved down into part-time jobs, making it worse.

— THE HOUSES WE NEED MORE OF ARE TOO CHEAP TO BUILD.  Builders can’t profit on those, so they aren’t building the affordable houses the market needs, only higher-end houses.  That means the “median price and below” price range will continue to be in high demand with rising prices.  Buy in that price range.   (Our rental model is perfect for this by the way)

— The Fed has no choice but to keep inflating the fiat money, otherwise the financial system fails.

Policy watch:  

— The NAR suit is getting sorted out.  From what I’m hearing about it, the NAR will not survive the result.  Which I think is fine because I’m not convinced they really add any value at this point.  The other issue is Seller’s may not have to pay Buyer’s agents. That is silly, since Buyer’s agents are who bring buyers to houses, Listing agents don’t do that. We’ll see, but I don’t see any practical improvement to the industry from this so far.

— Basically I don’t trust any of the gov economic reporting because it’s proven significantly inaccurate for 30months in a row.  The economy is NOT better when consumer saving is lower, and debt higher than ever. Total consumer debt in the US surged by $212 billion, or 1.2%, from the prior quarter to a fresh high of $17.50 trillion in the fourth quarter of 2023. 

— There is a lot of talk about the US Dollar status in jeopardy as the reserve currency right now due the expansion of the BRICS economic coalition.  It’s really tough to speculate what will happen.  It is evident the US is still the strongest, most stable economy by a longshot.   We’re going to see what happens in the new Middle East War.

—  Please be AGAINST a Central Bank Digital Currency (CBDC) by telling your Federal and State lawmakers you will not accept it.  It will be offered as a convenience, then cash will be demonized, then CBDC mandated unless the pushback starts now.  It will allow 100% control of opinions or your money gets turned off.  The Blackrock CEO said this, not me.

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Please protect your family’s financial future.  At the end of the day, you need assets that are in high demand, with a passive flow of income to you, at the best ROI possible without a lot of risk.

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*** Can you imagine replacing your job by this time next year?  You can!  ****

Fidelis Wealth Builders provides new and struggling investors a DIFFERENT PATH to quickly achieve incredible freedom with life-changing passive income through buying real estate from corporate sellers – without burning dollars in marketing or wasted time on unreasonable home owners – from anywhere in the world with internet and a phone, in only 5-7 hours per week, so you can quit your job or retire in style, and pursue your biggest dreams!

All it takes is 3-5 houses in our hold model to cover the average person’s bills, and you’ll have the skills to keep buying as many as you want – without the marketing and money challenges that stop most investors from making any money.

If you want to do it together so you can be out of the job grind as fast as possible, check out exactly how we do it so you can achieve Clarity, Confidence, Action, and Results in Real Estate.

We appreciate you and want to thrive together!

Corey & Team
Fidelis Wealth Builders

We like Altos and Attom for national market data

(but still rely most on HousingAlerts for local metrics).

Altos April 16, 2024 update.

Another great resource for RE data and trends is Joe Manausa Real Estate. Check this short about Housing Market Freeze.

More National Data Points To Follow

United States Total Housing Inventory

April 16 , 2024

United States Single Family Home Prices

April 16, 2024

April 16, 2024

US Historical Foreclosure Activity and Rates

US Delinquency Rate

Source: ICE

United States MBA 30-Yr Mortgage Rate

United States MBA Mortgage Applications

Affordability

Buy Where the People are Going

Top Ten Growing States

Top Ten Declining States

Longer Term Projection