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".
Quick Glance -
Let's Break Down Some of the Above -
Why Did Rates Go Up and Not Down
The realtors on this board are sharp, and give good advice. Unfortunately that's not the case for the average realtor. They barely understand their line of work, and consistently "insert foot and mouth" when attempting to be "mortgage experts" on their Facebook & Instagram pages.
Case in point, I've seen so many realtor posts telling their clients that they should run buy a home now because the Fed Cut 50 Basis points and literally telling everyone that means mortgage rates are a half a point lower.
As we've explained in this article and many of our sharp finance guys on this board have pointed out the FED controls short-term rates not long-term mortgage rates. When the FED cuts short-term rates that can be seen as inflationary and bonds hate inflation. Since mortgages are just bonds many times as happened this time when the FED cut short-term rates mortgage rates actually increased. Thankfully though the rise has not been dramatic.
The real rate news should be that in the last year the Conventional 30 Year Rate has dropped from 8.000% to 5.990% - that's a 2 Point Drop and happened all while the Fed was not cutting short-term rates.
Thus, if you purchased a home in the last 18 months now may be a good time to refinance. For example, I had clients buy a home with a jumbo mortgage last year and we just dropped their rate by almost 2 points and they are saving +/- $2300 a month or about $28,000 a year - needless to say they are happy.
Home Price Inflation 2.5X Higher Than The CPI and Rising Home Values
That's a n incredible difference between the rise in home prices and the rise in the price of everything else. It's been mentioned before in these previous posts, while it's nice everyone's home value are rising, the flip-side is that it exacerbates the home-affordability issue that more and more Americans are facing.
Despite this quandary, the outlook for rising home values is projected to be significant. Yes it is a Supply vs Demand Issue and we need more homes to be built. The issue is that in the areas where people want to live, many of these homes will not be affordable to many first-time homebuyers.
This Chart Will Put It Into Perspective & This is With a 15% Down Payment!
From Goldman Sachs
If You Are Buying a Home With a Roof That is 15 Years or Older - BEWARE!
As we all know Homeowner's insurance Rates have been going through the roof. Well now if you are buying a home with a roof over 15 years old expect to pay even more in premiums and you'll find many carriers will not insure it at "full replacement cost".
What's so important about "Full Replacement Cost"? The government agencies guidelines require that roofs are insured at "full replacement cost". Thus, if your policy does not provide for "full replacement cost" your loan will not get approved.
The problem is many carriers will not insure older roofs and those few that do insure them, come with a much higher premium/cost.
On top of that Texas is losing Insurance Carriers due to all of the claims from recent storms over the last few years. The latest to leave is "Progressive". On the bright side maybe we won't have to see their stupid commercials any longer.
So not only is Homeowner's Insurance costing more these days, we are facing fewer choices in the marketplace.
Current Rates -
30 Year Conventional High 5's - 15 Year Conventional High 4's - 30 Year FHA Mid 5's - 30 Year VA Mid 5's - 30 Year Jumbo Very Low 6's
Always happy to answer questions ITT or you can DM me.
Quick thought on Mississippi State game is that I wish "The Pirate" Mike Leach was still with us, the pressers would be gold - RIP
Let's go "Five in a Row"!!!
Hook 'Em!
MH
Prayers to our brothers and sisters in Florida affected by the hurricane.
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".
Quick Glance -
- Despite the FOMC approving a 50-bps reduction to the federal funds rate, treasury yields and mortgage rates have ticked up following the announcement as markets priced in too much easing before the Fed meeting.
- Fannie Mae and the Mortgage Bankers Association (MBA) anticipate mortgage rates to end the fourth quarter of this year with a quarterly average 30-year fixed mortgage rate of 6.2%, essentially where we are at today. Looking ahead to next year expectations are for only a modest improvement as rates are expected to drift into the high 5s.
- When 2024 is over, mortgage origination volume is expected to reach $1.751 trillion (19.6% growth from 2023) and improve to $2.269 trillion (29.6% growth from 2024) in 2025.
- The MBA sees refinance accounting for 42% of volume next year, while Fannie Mae believes the number will be closer to 30%. Either way, a pickup in the refi market to a quarterly average of $191B in 2025 is welcome news, as the mortgage market has been refi-starved after quarterly averages of $58.25B in 2023 and $111.5B in 2024.
- Both groups are projecting modest growth for existing and new home sales. Fannie Mae projects 10.9% growth in existing home sales and 3.3% growth in new home sales in 2025 compared to 2024.
- Since January 2020, national home prices have risen 53.4%, while overall inflation, as measured by CPI, has increased 21.3%. This means that home price inflation is 2.51 times greater than overall inflation post-pandemic.
- In July, national home price growth increased 4.96%. That was above the historic average of 4.54% from January 1998 through July 2024 and hotter than the decade averages in the 90s, 00s, and 10s.
- For homebuyers who are fearful of a home price correction, know this: National home prices have never had a negative return when held for a minimum of 11 years post-purchase, no matter which month a home was purchased.
- The average from 112 housing market experts see home prices rising 20.22% from 3Q2024 to 4Q2028. The most optimistic top 25% of panelists see home prices rising an average of 31.6% and even the most pessimistic bottom 25% of panelist see 7.5% growth.
Let's Break Down Some of the Above -
Why Did Rates Go Up and Not Down
The realtors on this board are sharp, and give good advice. Unfortunately that's not the case for the average realtor. They barely understand their line of work, and consistently "insert foot and mouth" when attempting to be "mortgage experts" on their Facebook & Instagram pages.
Case in point, I've seen so many realtor posts telling their clients that they should run buy a home now because the Fed Cut 50 Basis points and literally telling everyone that means mortgage rates are a half a point lower.
As we've explained in this article and many of our sharp finance guys on this board have pointed out the FED controls short-term rates not long-term mortgage rates. When the FED cuts short-term rates that can be seen as inflationary and bonds hate inflation. Since mortgages are just bonds many times as happened this time when the FED cut short-term rates mortgage rates actually increased. Thankfully though the rise has not been dramatic.
The real rate news should be that in the last year the Conventional 30 Year Rate has dropped from 8.000% to 5.990% - that's a 2 Point Drop and happened all while the Fed was not cutting short-term rates.
Thus, if you purchased a home in the last 18 months now may be a good time to refinance. For example, I had clients buy a home with a jumbo mortgage last year and we just dropped their rate by almost 2 points and they are saving +/- $2300 a month or about $28,000 a year - needless to say they are happy.
Home Price Inflation 2.5X Higher Than The CPI and Rising Home Values
That's a n incredible difference between the rise in home prices and the rise in the price of everything else. It's been mentioned before in these previous posts, while it's nice everyone's home value are rising, the flip-side is that it exacerbates the home-affordability issue that more and more Americans are facing.
Despite this quandary, the outlook for rising home values is projected to be significant. Yes it is a Supply vs Demand Issue and we need more homes to be built. The issue is that in the areas where people want to live, many of these homes will not be affordable to many first-time homebuyers.
This Chart Will Put It Into Perspective & This is With a 15% Down Payment!
From Goldman Sachs
If You Are Buying a Home With a Roof That is 15 Years or Older - BEWARE!
As we all know Homeowner's insurance Rates have been going through the roof. Well now if you are buying a home with a roof over 15 years old expect to pay even more in premiums and you'll find many carriers will not insure it at "full replacement cost".
What's so important about "Full Replacement Cost"? The government agencies guidelines require that roofs are insured at "full replacement cost". Thus, if your policy does not provide for "full replacement cost" your loan will not get approved.
The problem is many carriers will not insure older roofs and those few that do insure them, come with a much higher premium/cost.
On top of that Texas is losing Insurance Carriers due to all of the claims from recent storms over the last few years. The latest to leave is "Progressive". On the bright side maybe we won't have to see their stupid commercials any longer.
So not only is Homeowner's Insurance costing more these days, we are facing fewer choices in the marketplace.
Current Rates -
30 Year Conventional High 5's - 15 Year Conventional High 4's - 30 Year FHA Mid 5's - 30 Year VA Mid 5's - 30 Year Jumbo Very Low 6's
Always happy to answer questions ITT or you can DM me.
Quick thought on Mississippi State game is that I wish "The Pirate" Mike Leach was still with us, the pressers would be gold - RIP
Let's go "Five in a Row"!!!
Hook 'Em!
MH
Prayers to our brothers and sisters in Florida affected by the hurricane.
