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
Interest rates staying around 7%, the pace of house sales remains lower than new listing pace, so the national supply (inventory) of houses is still growing, about the same as last year’s seasonal pace (total inventory still well below pre-pandemic level). Has not peaked yet, however, the new listings pace is declining seasonally.
Not sure if new listings will decline faster than sales decline (and thus still have more inventory growth). Importantly, the percentage of listings with a price cut is 38% now, which is normal this time of year. It had another bump up from last week.
FL and Texas are still driving most of the rise in inventory, that is a leading indicator that there is downward price pressure with the growing inventory. Florida and Arizona are seeing prices declining. However we have not seen price decline across country. It’s 4% higher. The median price of new pending contracts is unchanged from last week.
Make your purchase and sale decisions based on the fact that it gets slower in most areas this 2nd half of the year.
MUST READ THIS JOBS REPORT ANALYSIS – https://www.zerohedge.com/markets/inside-most-ridiculous-jobs-report-years
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: 651,453 (altos)
This week’s SFH Inventory on Market: 668,363 (39.5% higher than same wk last yr)
Listing volume – 69,000 new listings is 8% higher than this same wk last year.
Sales volume – 62,000 new contracts is 9% less than this same wk last yr.
This Week’s price reductions are HIGHER to 38.6% = High, (normal is 30-35%).
(A leading indicator of buyer demand strength, and home price direction)
Last week’s Median Price of Homes in Contracts: $393,000
This Week’s Median Price of Homes in Contracts: $389,900 (3.1% higher than same wk last yr)
Last week’s SFH Median Home Price: $450,000
This Week’s SFH Median Home Price: $450,000 (unchanged vs. same wk last yr)
Last week’s Median Price of New Listings: $404,900
This Week’s Median Price of New Listings: $425,000 (_% higher vs. same wk last yr)
Housing Vacancy Rate: 6.6% – very low (quarterly)
National vacancy rates in the first quarter 2024 were 6.6 percent for rental housing and 0.8 percent for homeowner housing. The rental vacancy rate was higher than the rate in the first quarter 2023 (6.4 percent) and virtually the same as the rate in the fourth quarter 2023 (6.6 percent). Source
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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 Rate | 6.82 | 6.87 | percent | July 2024 |
| Mortgage Applications |
-2.20 |
3.90 | percent | July 2024 |
| 30 Year Mortgage Rate | 6.78 | 6.77 | percent | July 2024 |
| 15 Year Mortgage Rate | 6.07 | 6.05 | percent | July 2024 |
| Average Mortgage Size | 405.00 | 405.00 | Thousand USD | April 2024 |
The average rate for a 30-year fixed mortgage slightly increased by 1 basis point to 6.78% as of July 25th, remaining near its lowest level since mid-March, according to Freddie Mac. The stability comes as the market continued to fully price in an expected Federal Reserve interest rate cut at its September meeting. A year ago, the average rate for a 30-year mortgage was 6.81%…………….. source: Trading Economics
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Mortgage applications in the US fell by 2.2% in the third week of July, trimming the five-week high expansion of 3.9% in the earlier period to mark the third drop in mortgage demand in the last four weeks, according to data compiled by the MBA. The decrease took place despite another decline in benchmark mortgage rates, with the average on a 3-year contract dropping by 5bps to 6.82%……… source: Trading Economics
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DELINQUENCY RATE (as of June 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: June Sees Calendar-Driven Spike in Delinquencies; Foreclosures Remain Historically Low
– Coming off a near-record low in May and with June ending on a Sunday, the national delinquency rate jumped +14.5% (+45 basis points) to 3.49%, its second highest level in 18 months
– Sunday month-ends often lead to sharp, but typically temporary, spikes in delinquent mortgages, as payments made on the last day of a given month are not processed until the following month
– As such, June saw a +19.6% increase in the number of borrowers a single payment past due – the highest inflow since May 2020 – while 60-day delinquencies rose 11.8% to a five-month high
– Though up 5.1% from May, serious delinquencies (loans 90+ days past due but not in active foreclosure) were still down 8.5% year over year and 10.1% below pre-pandemic levels
– Foreclosure starts declined 6.2% in June – pushing active foreclosure inventory to its lowest point since the end of COVID-era moratoriums, now 34% below pre-pandemic levels
– 5.3K foreclosure sales were completed nationally in June, representing a -14.9% month-over-month decrease to their lowest level since February 2022, still well below pre-pandemic norms
– Prepayments eased -7.6% from May, breaking a six-month streak of increasing prepay activity as we near the typical seasonal peak of home sales, and affordability and rate constraints persist
https://www.icemortgagetechnology.com/resources/data-reports/first-look-at-june-2024-mortgage-data
Fidelis’ Weekly Take:
— We’re half way through Summer with sales slower than listings, which is same every year. The unknown is how much longer the recency bias of interest rates at 7% are going to keep buyer demand low.
But interest rates can’t overcome job uncertainty, which is permeating the market. People want to be confident in the economy to obligate to a home mortgage. I did notice a huge surge in multifamily starts this past period. Clearly the big money sees more apartments, vs single family purchases.
Also why we like heading into room rental for our own exit strategy in single family houses. The jobs report link in my take at top is a must read, it explains native born Americans are losing hundreds of thousands of non-farm jobs to foreign workers. These are not jobs “Americans won’t do”. Every statistical measure of the last 3 years of governing policy have shown staggering movement in the wrong direction for prosperity.
— With that said, we are still millions of houses shy of what we need for the population. Affordability will continue to be out of reach without more building at the median and below price range.
— Hi int rates are still increasing banking stress, and the US owes 34 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. Keep an eye on that, and be prepared for a stoppage in our money system.
— Please say NO to Central Bank Digital Currency (CBDC) in any form.
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).
We appreciate you and will succeed together!
We like Altos and Attom for national market data
(but still rely most on HousingAlerts for local metrics).
Altos july 23, 2024 update.
Another great resource for RE data and trends is Joe Manausa Real Estate. Check this short about Why 3 Big Buyer Types Have Quit The Housing Market
More National Data Points To Follow
United States Total Housing Inventory
source: tradingeconomics.com
July 23 , 2024
US Historical Foreclosure Activity and Rates
US Delinquency Rate
Source: ICE
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
