RE Market Memo
Be the smartest person in the room on the real estate market so you can avoid pain and maximize profit.
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 most important thing to know is the national supply of houses for sale remains stable, but the increase in available houses for sale has not seasonally peaked yet because mortgage rates are still creeping upward. The seasonal downward trend in avail houses for sale will likely start happening this week.
“Imminent crash” is clickbait. (or ignorance) While anything CAN happen, the odds are MUCH higher that prices keep going up instead of down, especially in starter homes. (The exception is a total monetary failure of our currency).
Key Stats:
(from our friends at Altos, Hartman, Manausa, and others)
Last week’s SFH Inventory on Market: 570,000 (altos)
This week’s SFH Inventory on Market: 566,000 (last yr 0.5% less)
(this week in 2019 had 859,000 houses for sale)
Last Week’s SFH Median Home Price: $428,000
This Week’s SFH Median Home Price: $425,000 (415k this wk last yr)
Last Week’s Median Price of New Listings: $380,000 (leads median price)
This Week’s Median Price of New Listings: $ 375,000 (365k this wk last yr)
Vacancy Rate:: 4% – near record low
(All Residential Rental Property Units Available for an Individual to Occupy, excluded are seasonal properties, occasional use, second homes, vacation homes, )
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MORTGAGE RATES & APPLICATIONS
Because the current market relies HEAVILY on the CHANGE in mortgage rates, we’ve added this section.
Mortgage applications in the US edged 0.3% higher on the week ending November 24th, extending the 3% jump from the previous month and marking the fourth consecutive rise in mortgage applications since hitting a 28-year low in late October.
The recovery was aligned with the sharp pullback for mortgage costs in the period, consistent with the decline in US Treasury yields as disinflation and softening economic data drove markets to ease expectations on how long the Fed will maintain its terminal rate for, in turn supporting consumers’ willingness to take loans.
Applications for new homes rose by 4.7% from the previous month, offsetting the 8.9% decline in applications to refinance a home. In the meantime, the average rate on a 30-year fixed mortgage with conforming loan balances fell to a 10-week low of 7.37%. – There is a chart on the market memo page for this now.
If you have 2.5 more minutes see below:
Fidelis’ Take:
– Inventory finally peaked and is declining until Summer of 2024 The consensus is there will be a strong buying surge in Spring driving it lower like it did Spring of ’22 and ’23. The available housing inventory remains extremely low in most markets. Some markets like South Florida are normalizing quicker. The big question is banking stress because the US owes 33 Trillion dollars in national debt. Was 10 Trillion in 2008. Yes that’s ridiculous.
– The key is sales volume. It’s higher this Fall than last year, mainly because rates dipped. The key is mortgage interest rate change, not necessarily the rate itself. When it drops people are running out to buy. But life stage is still forcing people to buy even if the rates is what it is. Notice mortgage apps picked up the last 2 months.
— Affordability is record bad, 1% shy of the record problem back from the 70s. This means the mortgage payment on the median house is highest in a long long time relative to wages. It’s 40.5% of the median wage to own a home right now.
— I always point out the word “probable” is usually 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. The price cooling as we enter Fall is on normal 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 low inventory compared to previous years. This is why the “crash” word is hard to give credence to right now.
– “For sale” inventory now DECREASES until January because Sellers are going to pull listings until after Christmas and then sales volume is normally higher than new listings after that.
— Median Home Price is about 1.8 – 2% HIGHER than this same week in 2022.
— Weekly Pending Sales (volume) is 52k new contracts pending vs 48k this same week last year. Last year sales volume was plummeting this week, we’re seasonally stable right now. We’re about to eclipse the total number of 2022 sales. SALES VOLUME THIS FALL IS HIGHER THAN LAST YEAR, this is good.
— SALES VOLUME WILL SEASONALLY DECLINE REST OF YEAR. If you have a house for sale then price it to sell it now or wait until Feb.
— 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 makes it an incredible ROI.
— Rents will 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 to cause a problem of over-supply of housing for sale, and thus a price/rent drop.
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Issues affecting RE availability and price:
— AirBnb is taking a hit as I said it would. When inflation eats away everyone’s disposable income, vacation rents come down.
— 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 part0time jobs, making it worse.
— Foreclosure activity – There were a total of 124,539 properties with foreclosure filings during Q3 2023, up 28% from the previous quarter and up 34% from a year ago….to give you context, it was 900k houses in Q1 2010. We’re still in record low foreclosure territory.
Lender STARTED 68,000 foreclosures in Q3 2023, DOWN 1% from previous quarter.
— 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:
— There is an Nation Association of Realtors class action suit filed. More to come on that.
— 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.
— Please be AGAINST a Central Bank Digital Currency (CBDC) by telling your Federal and State lawmakers. 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.
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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 proven roadmap 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 2-3 houses in our hold model to cover your 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 the 5 shifts you must take to 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 Nov 27, 2023 update.
Another great resource for RE data and trends is Joe Manausa Real Estate. Here is his recent video talking about the new Zillow home affordability tracker…
More National Data Points To Follow
United States Total Housing Inventory
source: tradingeconomics.com
Nov 27, 2023
Nov 27, 2023
United States MBA 30-Yr Mortgage Rate
source: tradingeconomics.com
United States MBA Mortgage Applications
source: tradingeconomics.com
Affordability
Zillow Monthly Affordability Tracker
Zillow Observed Rent Index
Buy Where the People are Going
[Source: U.S. Census Bureau]
Top Ten Growing States
Top Ten Declining States
Longer Term Projection
