The Economic Ripple Effect of Real Estate Market Shifts | 1-Minute Market Update w/ Martin Perdomo

Are you feeling the heat of the escalating real estate market? Whether you're an investor, realtor, or simply an interested party, get ready to become a knowledgeable insider. This week, we delve into the nitty-gritty of the housing market, examining the latest data from Redfin. We discuss the recent developments, from the concerning 3% dip in mortgage purchase applications to the surprising 8% decline in Google searches for homes for sale. Yet, even amidst these trends, home prices continue to rise, reaching a median that's an eye-watering $381,225. 

But we don't stop there. We go beyond the numbers to explore the wider economic implications. With the US consumer inflation rate on an upward trajectory, we ponder its potential impact on the decisions of the Federal Reserve and how it could shape real estate trends. In our final segment, we tackle a hot-button issue - the ongoing battle against real estate money laundering. We take a hard look at the US Treasury Department's proposed rule to put an end to anonymous luxury home purchases, dissecting its potential impact on the real estate industry and future transactions. Get ready to gain some valuable insights - this episode promises a deep dive into the labyrinth of the real estate market!

Transcript

Speaker 0: 0:00

Breaking news, as the US is set to unveil long-awaited crackdown on real estate money laundering. Find out more in this week's weekly real estate market update. But before that, here's this week's housing market data, courtesy of Redfin. Mortgage purchase application during the week ending August 4th declined 3% from the week earlier, seasonally adjusted, and purchase applications were down 27% from a year earlier. Google searches homes for sale were down roughly 8% from a month earlier during the week ending August 5th and down about 11% from a year earlier. Median home sale prices was $381,225, up 3% from a year earlier. That's the biggest increase since November. So prices are still going up right. So we're seeing demand come down, obviously with the google searches, but also inventory is going down in the same equal amount and prices are still gaging upward. The median asking price of a newly listed home was $386,748, up 2.5% from a year earlier. The monthly mortgage payment on the median asking price hit a record of $2,602 at a 6.9% interest rate. The average for the week ending August 3rd. Pending home sales were down 13% year over year, continuing a 15 month streak of double digit declines. Again, demand has gone down, but also inventory has gone down as well, and here it is new listings of homes for sale fell 16.5% year over year and active listings dropped 17.9% from a year earlier, the biggest drop since February of 2022.

Speaker 0: 2:09

43.6% of homes that went on the contract had an accepted offer within the first two weeks on the market, up from 41 a year earlier. Homes that sold were on the market for a median of 28 days, that's up from 24 days a year earlier. However, even though that this week's data shows that the median days on the market was 28 days, just a few months ago it was 49 days, so this is a good sign for the marketplace. 35.3% of homes sold above their final list price was down 42% from a year earlier. So again, in essence, the market is. Demand is going down because of interest rates and also prices are coming up. Demand is going down, prices are coming up and also inventory is going down, which is the great equilibrium. Right is equalizing everything. So we'll see what happens here. Something's got to happen. Something really quirky has got to happen in the market, maybe, like foreclosure, god forbid. The unemployment rate rises to, and you know a problem where there's a problem with unemployment that could then trigger foreclosures, and foreclosures can bring a slew of new inventory into the market. Builders are not keeping up with the demand.

Speaker 0: 3:33

Still so interesting in this week's inflation rate update is courtesy of market watch. So US consumer prices rose a mild 0.2% in July, but the rate of inflation rolls for the first time in more than a year, in a sign of it's going to take a while to get the cost of living fully under control. Still, a steady slowdown in inflation over the past year could keep the federal reserve on the sidelines, where senior officials considered whether to raise interest rates again at the next meeting in September. The yearly rate of inflation meanwhile rolls to 3.2% to 3% in the prior month. It's the first increase in 13 months, though inflation has eased considerably since hitting a 40 year high of 9.1% in the middle of 2022. So inflation is slowing down, which is a good thing. Here we are in the month of August and we're reporting on July's month of August of 2023. We're reporting on July's inflation rate because this is the data that we look at in the past, as a lag data that we see, and so inflation is slowing down, which is a good thing. Hopefully, the feds won't continue to raise interest rates, as the feds said, as Jerome Powell said that he wants to be more accommodating, and I quote him more accommodating in 2024, which hopefully means that he might want to lower interest rates. We'll have to wait and see as to what the feds do, but this is a good sign heading and pointing towards that direction, and this week's real estate related news is brought to you by Rutter's.

Speaker 0: 5:20

The US Treasury Department will soon propose a rule that will effectively end anonymous luxury home purchases, closing a loophole that the agency says allows corrupt oligarchs, terrorists and other criminals to hide ill gotten gains. The long awaited rule is expected to require real estate professionals, such as title insurers, report identities of the beneficial owners of companies buying real estate in cash to the Treasury's financial crimes enforcement network, fincen. Fincen is slated to propose the rule sometime this month, according to his regulatory agenda Through the timeline, though the timeline could slip, said two people briefed with the developments. Anti-corruption advocates and lawmakers have been pushing for this rule, which will replace the current patchwork reporting system that's currently in place.

Speaker 0: 6:18

Finsons have, for decades, anonymously hidden ill gotten in real estate. Treasury Secretary Janet Yellen said in March, adding that as much as $2.3 billion was laundered through US real estate between 2015 and 2020. The American Land Title Association, which represents title insurance insurers, says it welcomes the new rule but that FinCEN should delay it until the Shell company rule is completed. The proposed rule will be open to the public for industry feedback. And this has been your weekly real estate market updates. I'll see you guys next week. Peace out.