Are we living in a time where housing affordability is on the brink of extinction? As we take a deep dive into the latest Housing Market Data from Redfin, some ominous signs emerge – a dip in mortgage purchase applications and a surge in the median asking price for newly listed homes. We explore these bewildering times where the American dream of home ownership seems to be drifting further away from the median family.
We address the elephant in the room - the alarming number of U.S. families sliding below the qualification standards for a sizeable loan. Amidst these challenges, we also touch upon the skyrocketing government debt and the looming reset of $1.5 trillion of commercial debt. As we traverse through this complex landscape, we firmly believe that adversity breeds opportunity. So join us, as we seek to identify these hidden opportunities and prepare you for what lies ahead in the housing market.
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What will it take to make homes affordable again for millions of Americans? Find out 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 Applications are down 2% from a week earlier and down 22% from a year earlier. We are down. Mortgage purchase applications are down to a 30 year low, guys. This is how the man has fallen for mortgage applications. It is insane. Google searches for homes for sale is down 12% from a month earlier and down 12% from a year earlier. Median home sales price was $369,975, up 3.1% from a year earlier. The median asking price for a newly listed house was $384,375, up 5.4% from a year earlier the biggest increase in a year, which is weird, as mortgage purchase applications are down to almost a 30 year low. Yet the median asking price is up 5.4% from a year earlier. Very weird times, guys. The monthly mortgage payment on a median asking price was $2,738 at a 7.6% mortgage rate, which was the weekly average for last week. We crossed over last week to see. You guys know, last week we crossed over the 8% threshold as it pertains to mortgage rates, but the average was 7.63. Pending home sales were down 7.3% year over year, the smallest decline since April of 2022, partly because pending sales fell rapidly this time last year, in 2022. New listings of homes for sale are up 0.3% year over year, the first increase since July of 2022. So new listings are up. That's a good sign. Some inventory New listings dropped 12% from a year earlier. Well, 38.3% of homes that went on the contract had an accepted offer within the first two weeks on the market. Homes that sold were on the market for a median of 33 days and 29.8% of homes sold above their final list price and reported by CNBC. As mortgage rates reached a 23 year high last week, the cry went off across markets and social media Is housing affordability dead? That's a question for all of you listeners and viewers to answer. The question is short because housing affordability has dropped by nearly half since the ultra low interest rate days of 2021. According to the National Association of Realtors, the median family was already $9000 short in August of the income needed to buy the median existing home. The association says A recent surge in rates since have moved another 5 million US families below the qualification standards for a $400,000 loan. According to John Burns real estate consulting, at 3% mortgage rates, 50 million households could get a loan that size. Now it's only $22 million. Guys, this is a big problem for America. This is a big problem for affordability. This is a big problem for the American dream, which is home ownership Major issue. Something's got to give here. While an easing in Treasury this week has bought the 30-year fixed mortgage back a shade below the 8%, there's no quick fix. Qualifying yearly income for medium price house in 2020 was $49,680. Now it's more than $107,000 according to the National Association of Realtors. It's a very worrisome development for America. The NAR chief economist, lawrence Young, said Affordability depends on three big numbers, according to John Family income, the price of a house and the average mortgage rate. With incomes rising since 2019,. The bigger issue is interest rates. When they were low, they papered over a surge in housing prices that began in late 2020, helped by people relocating to assets like Florida, austin, texas and Boise, idaho to work in their old cities from their new homes. Now the surge in rates is crushing affordability, even as incomes rise sharply and housing prices mostly hang on to the big gains to generate it during the COVID era. At the same time, demand for adjustable rate mortgages has spiked to its highest level in years amid the broader slowdown in mortgage applications. So, guys, I've been talking about this now for months, almost a year, I'm going to say. This mortgage rate hike has happened so fast, so quickly. It is creating havoc in the marketplace, just absolute havoc. We're seeing major issues happening in the commercial real estate. Already we have $1.5 trillion of commercial debt scheduled to reset over the next two quarters. That will create havoc If the feds don't do something about this. I'm just curious about will they lower rates? We're going into an election year, so that's another variable to consider. Interest on the government debt is through the roof as well. That's another problem that the government Congress has to figure out. So we've got some challenges ahead. However, when there's adversity, napoleon hails great book Thinking Grow Rich. He says that in every adversity lies an equal to, or better than, opportunity. Where is our opportunity? And the adversity is coming up and are you ready? Have you spent some time thinking about it? I think you should if you haven't, because there will be opportunities for those of us that are spending some think time and that are ready for these opportunities. And this has been your weekly Real Estate Market Update. I'll see you, guys next week. Thanks,