Forecasting the Future of the Property Market | 1-Minute Market Update w/ Martin Perdomo

Brace yourselves as we navigate through the turbulent currents of the real estate market. This episode uncovers the startling decline in pending home sales, a slump that has dived deeper than the depths reached during the financial crisis. We sift through intriguing market data, including a surge in mortgage purchase applications, a fall in Google searches for homes, and the baffling steadiness of asking prices for freshly listed homes amidst high interest rates and low inventory. Beware though, this stability isn't everlasting, and we're primed for a price drop sooner rather than later.

In the latter segment, we illuminate the rising trend of homeowners refinancing their mortgages to offset high-interest credit card debts – a strategic move considering the financial landscape. We turn the spotlight on some captivating data around active listings, accepted offers, and selling prices. To wrap it all up, we gaze into the crystal ball to share our insights on what 2024 and beyond holds for us – prospective opportunities, potential hurdles, and the real estate market's trajectory. Keep your ears peeled to this episode for a holistic understanding of our current standing and possible future.

Transcript

Speaker 0: 0:00

Pending home sales drop to a record low, and it's even worse than during the financial crisis. Find out more in this week's real estate market update, but before that, here's this week's market housing data. Mortgage purchase applications were up 5% from a week earlier and down 19% from a year earlier. That's a big, big decrease. Google searches for homes for sale is down 13% from a month earlier. The median asking price for newly listed homes was $371,730, up 4.2% from a year earlier, which is just interesting. The way this data is presenting this just shows us that, even though interest rates are high, the demand and the shortage of inventory still hasn't really put the screws on the pricing in some areas and some price points. But it will. I'm. I'm assuring you that it will absolutely hurt the market eventually. This thing works itself slow. We will see an overall decrease in prices. You have some markets that are already experiencing it. Just wait and see. The median asking price of newly listed homes was $371,225, up 6% from a year earlier. The monthly mortgage payment on a median asking price was $2,575 at a 7.29% mortgage rate, down $164 from the all time high set a month earlier the lowest level in three months. This is good. We're seeing rates coming down and, by the way, as I record this market update, the 10 year treasury is 4.22%, which is a good day and a good time. What's today's day? Today is November 30th 2023. Today is a good day to lock the rates. It's the lowest I've seen it all year, actually at 4.2% Very good, so we're going to see rates come down even more.

Speaker 0: 1:56

Pending. Home sales were down 6.9% year over year. New listings of homes for sale were up 5.8% year over year, the biggest uptick in two years. This increases partly because new listings were falling at this time last year. Again, to my point exactly, interest rates are going up and now we're seeing new listings, which is really interesting. Right, there was a movement of hey, interest rates are low, so these people that are locked into these interest rates aren't going into 8% interest rate.

Speaker 0: 2:28

The problem is that we're seeing people's credit cards payments going up because, remember, credit cards are not fixed debt. Credit card is variable. So as the federal interest rates goes up, your credit card debt goes up. So people, even though they're in 4% and 5% interest rates mortgages, they're going to go refi to pay off that $20,000, $30,000 credit card. That's 24, 25, 26. And in some cases 29%. And that just makes sense because solid date, even at a 7% interest rate, and now you don't have that $700, $800 a month payment. That's killing a Americans with those credit cards.

Speaker 0: 3:04

Active listings dropped 7% from a year earlier, the smallest decline since June. 33.7% of homes that went under contract had an accepted offer within the first two weeks on the market and homes that sold were on the market for a median of 35 days and 27.3% of homes were sold above their final list price. So interesting data, I think. Again I've been preaching this. I think that 2024 is going to be a really interesting year for real estate. I think we're going to see some opportunities and the data is showing to that, although we're seeing prices still 4.2% year over year an increase in value. This is good, but it can't sustain for long If the interest rates stay here. Now we are going into an election year interest rates I am expecting interest rates to drop next year. It's what the feds themselves, jay Powell, said himself and you go to their website, you'll see what their own predictions are. They are expecting to bring the rates out when the rates go down, guys, we're going to see another push of high values come up, so prices are going to go up. So this is something to be paying attention to. I think the time to buy property is going to be. We're going to have a window from now to second third quarter of next year's when the Fed start to lower. The rates reported by CNBC pending.

Speaker 0: 4:28

Home sales in October dropped to the lowest level since the National Association of Realtors began tracking them in 2001. They hit the lowest level since it NARS began tracking this metric in 01, meaning it's even worse than readings during the financial crisis over a decade ago. Sales were down 8.5% from October of last year Because the index measures assigned contract its most recent indication of housing demand. It reflects the buyers who were out shopping in October, which was when the popular 30-year fixed mortgage rate shortly hit higher than 8%. So in October we hit those higher than 8% rates. So it's seeing how bad things got when we shot up this. High Rates have since pulled back to around 7.3%, according to the mortgage news daily.

Speaker 0: 5:20

The realtors continue to say it's just high rates but still very low supply of homes for sale, thus deflating activity Depending. Sales fell in all regions month to month except in the northeast. They fell the most deeply in the west. So California, vegas, all of these places are getting budget, are getting killed right now, which is where homes are most expensive. Sales were down everywhere compared with a year ago. Tight supply and still strong demand have kept pressure on home prices, which not only continue to hit highs but appear to be accelerating, and they're gained. The realtors noted that sales of homes price above $750,000 have been increasing simply because there's more supply on the high end of the market. So, again, opportunity, especially in the high end market. I believe there's going to be opportunities. Actually, I believe now they're there. They're there, right there. There is opportunities in that market.

Speaker 0: 6:19

So really interesting times, guys. We're going through some interesting and historic times right now in the real estate arena and the business arena. We've never had a Fed chair increase rate by this much, this fast, ever. So I think something's bound to break. We'll see what's going to break. I think that next year the Fed will have to bring rates down because Americans will just be, they'll be hurting. Americans will be hurting with credit cards at the rates that they are. But then there's the other side to that, guys. Rates come down, rates start to come down, then prices again begin to go up. So it just they have a really difficult job to do. The feds do. I don't wish to be them, that's for sure, because they have so much, so much impact, so much financial markets and how it impacts everyday people just like you and I. And this has been your weekly real estate market update. I'll see you guys next week, peace.