Since many on this site may be buying or selling a home at any given time, own investment properties, or commercial real estate I'm posting this weekly update to stay current.
The data is well researched from multiple sources concerning the real estate & mortgage market.
Thus, it is fact based and only analyzing the data/trends without regard to government policy.
As I stated previously let's keep the thread informational for those that might be in the market and leave policy discussions in "The Corral".
Current Rates -
30 Year Conventional - High 6's
15 Year Conventional - High 5's
30 Year Jumbo - Mid 6's
30 Year FHA - Low 6's
30 Year VA - Low 6's
Where Will Rates Be for the New Year -
Likely the most asked question of any lender is, "What are rates going to do?" While I have a very good grasp on what drives interest rates, I've always deferred to the experts to answer this question.
Those two experts are Barry Habib of MBS Highway, and Dr. Ted Jones, the former Chief Economist for both the Real Estate Center for the Texas Real Estate Commission, and the Senior VP/Chief Economist for Stewart Title. These gentlemen are Titans in the Industry. Barry Habib is regularly featured on CNBC & Fox Business, while Dr Jones makes over 300 presentations a year on real estate in the economy.
Earlier this month I was privileged to hear their annual presentations on their forecasts for rates and the housing market for the year. They were both in alignment though for slightly different reasons.
Both Barry & Ted said that we should expect rates to range between 6% on the low side, Barry's actual low was 5.75% to the high side of the mid to upper 7% range. Barry based his on the "Technical Analysis" of the 30 Year Fixed Rate Mortgage Spread Above the 10 Year Treasury . Ted based his on the "Fundamental Analysis" that with the US Government having to refinance Trillions in Government Debt this year it would keep rate from going lower.
Sidebar - I have subscribed to Barry Habib's Mortgage Backed Securities Trading Service, called MBS Highway, for over 15 years. They follow the Mortgage-Backed Securities market in real-time and advise us on a daily & up to the minute basis whether we should be locking our clients loans or letting them float to lock in at a later date for a better rate.
Their recommendations have saved my clients an enormous amount of money over the years - if your lender does not subscribe to a service like this one, how can they advise you with confidence whether to lock or not based on the data?
Other Economic Forecast of Data Points of Interest for 2025-
Home Price Appreciation - Up from 4.0% to 4.5% YoY
Core PCE Inflation - Down to 2.1%-2.2% from 2.8%
Unemployment Rate - Up to 4.5% to 4.6% from 4.2%
Fed Funds Rate - Up from 3.25% to 3.5%
Does Homeownership Have Rewards -
Another interesting data set I took away from the presentations was on Homeownership - more specifically does it pay in general to own a home? The data overwhelmingly suggest that it does. Here are the numbers:
Total Households in the US is 136 Million and of those 91 Million are Owned & 45 Million Are Rented
The Total Equity for the Rented Households is $0
The Total Equity of the Owned Household is $37 Trillion - With the Average Household Having $407,00 in Equity
Breaking the Owned Household Down Further -
There Are 35 Million Homes that are "Free & Clear" that have $20 Trillion in Equity or an Average of $571,000 Per Household
There Are 56 Million Homes that are "Mortgaged" that have $17.3 Trillion in Equity or an Average of $311,000 Per Household
There are 1 Million Homes with "Negative Equity" but that "Negative Equity" is only $300,000,000
Can these change in the short term? Absolutely! There will always be up and down movements in home prices. But if you look overtime the long-term trend is up as seen by this chart from the US Federal Housing Finance Agency:
Demographics is Destiny -
They say numbers don't lie and i that's the case then Gen Z looks to be the driver of future housing demand. Let's look at this char of "Homeownership Rates" by Generation:
Right now the Median Age of "Gen Z" is 20 Years Old with a Current Homeownership Rate of 8% - obviously that's not a lot, but let's look at where their Homeownership Rate should be in just 10 years based on the past history of the prior 3 generations of the "Boomers", "Gen X", and the "Millennials".
Based on this data and the calculations done by Barry Habib he shows that in the Next 10 Years "Gen Z's" Homeownership Rate should increase from 8% to 33% and that equates for 17 Million more homeowners.
In my opinion based on this data the long-term appreciation for homes should continue as shown in the previous FRED Chart of Historical Housing Prices.
Odds & Ends of Note -
I'd say the difference that should be pointed out in the below post is that if rates rise the value of the bond will go down & rates rise due to inflation which historically has caused real estate values to increase.
Every business has it's "ups and downs" and the last couple of years it has been the Mortgage Industry's "turn in the bucket", this year is forecasted to be more of the same. Some may see this as a bad thing - I see it as an opportunity!
Be glad Texas did NOT make this Top 10 List!
Parting Thoughts -
I paused this thread last week due Texas being in the playoffs - Like a little kid I was too excited to concentrate on writing it, and wanted to concentrate on the Longhorns.
Then after the game, I was too depressed, like a little kid when that first "love of your life" rips your heart out, to get it written.
Now like our Longhorns it's time to move forward and get back in the saddle! I hope you found the content of value in 2024 and my goal is to make it even better in 2025!
I'm always here to answer any questions or give advice - post your questions here or send me a DM!
Hook 'Em & God Bless!
MH
The data is well researched from multiple sources concerning the real estate & mortgage market.
Thus, it is fact based and only analyzing the data/trends without regard to government policy.
As I stated previously let's keep the thread informational for those that might be in the market and leave policy discussions in "The Corral".
Current Rates -
30 Year Conventional - High 6's
15 Year Conventional - High 5's
30 Year Jumbo - Mid 6's
30 Year FHA - Low 6's
30 Year VA - Low 6's
Where Will Rates Be for the New Year -
Likely the most asked question of any lender is, "What are rates going to do?" While I have a very good grasp on what drives interest rates, I've always deferred to the experts to answer this question.
Those two experts are Barry Habib of MBS Highway, and Dr. Ted Jones, the former Chief Economist for both the Real Estate Center for the Texas Real Estate Commission, and the Senior VP/Chief Economist for Stewart Title. These gentlemen are Titans in the Industry. Barry Habib is regularly featured on CNBC & Fox Business, while Dr Jones makes over 300 presentations a year on real estate in the economy.
Earlier this month I was privileged to hear their annual presentations on their forecasts for rates and the housing market for the year. They were both in alignment though for slightly different reasons.
Both Barry & Ted said that we should expect rates to range between 6% on the low side, Barry's actual low was 5.75% to the high side of the mid to upper 7% range. Barry based his on the "Technical Analysis" of the 30 Year Fixed Rate Mortgage Spread Above the 10 Year Treasury . Ted based his on the "Fundamental Analysis" that with the US Government having to refinance Trillions in Government Debt this year it would keep rate from going lower.
Sidebar - I have subscribed to Barry Habib's Mortgage Backed Securities Trading Service, called MBS Highway, for over 15 years. They follow the Mortgage-Backed Securities market in real-time and advise us on a daily & up to the minute basis whether we should be locking our clients loans or letting them float to lock in at a later date for a better rate.
Their recommendations have saved my clients an enormous amount of money over the years - if your lender does not subscribe to a service like this one, how can they advise you with confidence whether to lock or not based on the data?
Other Economic Forecast of Data Points of Interest for 2025-
Home Price Appreciation - Up from 4.0% to 4.5% YoY
Core PCE Inflation - Down to 2.1%-2.2% from 2.8%
Unemployment Rate - Up to 4.5% to 4.6% from 4.2%
Fed Funds Rate - Up from 3.25% to 3.5%
Does Homeownership Have Rewards -
Another interesting data set I took away from the presentations was on Homeownership - more specifically does it pay in general to own a home? The data overwhelmingly suggest that it does. Here are the numbers:
Total Households in the US is 136 Million and of those 91 Million are Owned & 45 Million Are Rented
The Total Equity for the Rented Households is $0
The Total Equity of the Owned Household is $37 Trillion - With the Average Household Having $407,00 in Equity
Breaking the Owned Household Down Further -
There Are 35 Million Homes that are "Free & Clear" that have $20 Trillion in Equity or an Average of $571,000 Per Household
There Are 56 Million Homes that are "Mortgaged" that have $17.3 Trillion in Equity or an Average of $311,000 Per Household
There are 1 Million Homes with "Negative Equity" but that "Negative Equity" is only $300,000,000
Can these change in the short term? Absolutely! There will always be up and down movements in home prices. But if you look overtime the long-term trend is up as seen by this chart from the US Federal Housing Finance Agency:
Demographics is Destiny -
They say numbers don't lie and i that's the case then Gen Z looks to be the driver of future housing demand. Let's look at this char of "Homeownership Rates" by Generation:
Right now the Median Age of "Gen Z" is 20 Years Old with a Current Homeownership Rate of 8% - obviously that's not a lot, but let's look at where their Homeownership Rate should be in just 10 years based on the past history of the prior 3 generations of the "Boomers", "Gen X", and the "Millennials".
Based on this data and the calculations done by Barry Habib he shows that in the Next 10 Years "Gen Z's" Homeownership Rate should increase from 8% to 33% and that equates for 17 Million more homeowners.
In my opinion based on this data the long-term appreciation for homes should continue as shown in the previous FRED Chart of Historical Housing Prices.
Odds & Ends of Note -
I'd say the difference that should be pointed out in the below post is that if rates rise the value of the bond will go down & rates rise due to inflation which historically has caused real estate values to increase.
Every business has it's "ups and downs" and the last couple of years it has been the Mortgage Industry's "turn in the bucket", this year is forecasted to be more of the same. Some may see this as a bad thing - I see it as an opportunity!
Be glad Texas did NOT make this Top 10 List!
Parting Thoughts -
I paused this thread last week due Texas being in the playoffs - Like a little kid I was too excited to concentrate on writing it, and wanted to concentrate on the Longhorns.
Then after the game, I was too depressed, like a little kid when that first "love of your life" rips your heart out, to get it written.
Now like our Longhorns it's time to move forward and get back in the saddle! I hope you found the content of value in 2024 and my goal is to make it even better in 2025!
I'm always here to answer any questions or give advice - post your questions here or send me a DM!
Hook 'Em & God Bless!
MH
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