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 various reliable sources and is a weekly accumulation of different data that can drive the real estate market up & down.
Thus, it is fact based and only analyzing the data/trends without regard to political bias.
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".
Texas Leads the Way in New Home Construction -
Texas holds 4 of the Top 5 Cities in the nation for Top 50 Markets for New Construction with Texas and Florida representing one third of the entire list. Apparently for now Dallas > Houston
On the national level inventory ticked lower to a level of 462,000 homes for sale or a 1.1% decrease. The number of homes for sale on the market stood at 7.5 months' supply at the current sales pace, which would indicate a buyers market if it weren't for the lean level of existing homes on the market. Combining the two markets places us at 4.5 months' supply, which still represents that sellers are in control when it comes to achieving their higher sales price targets.
Powell at Jackson Hole Almost Guarantees a Rate Cut -
FED Chairman Powell hit the road last week and delivered prepared remarks at the Fed’s Jackson Hole Monetary Policy Symposium all but confirming a September rate cut. During the speech, he cited a cooling labor market and inflation closing in on the Federal Reserve’s 2% annual target as reasons the Fed is ready to pivot, stating, “The time has come for policy to adjust”. However, Powell didn't provide the markets with any additional specifics, only that "the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
30-year fixed mortgage rates have dropped to 6.46% according to Freddie Mac's latest survey, while the 10-year treasury has fallen to 3.84%, moving the spread between the two to 2.60% as mortgage lenders adjust their margins. Although the improving spread is welcome news as it continues to improve mortgage rates, it's still off roughly 75 basis points from its historical average. If the spread were to return to its historical average, we would be looking at 30-year fixed mortgage rate of 5.75%, opening up more refinance opportunities and get additional home sellers and buyers off the sidelines.
Couple of Notes to the Above -
1. Likely the Rate Cut is already priced into the markets - that's how markets work in general - markets move then the news hits the public - here is some guidance we received earlier this week from our secondary department that prices our mortgages:
Quiet start to the week here as we begin to wind down summer. Data is light on the calendar this week, though we do get Core PCE, the Fed’s preferred inflation indicator, and Q2 GDP – both are important to the Fed and could offer some guidance on the future of Fed interest rate policy.
With Jackson Hole now in the rearview, markets are pricing in 100bps of rate cuts for the remainder of the year, which means the Fed will have deliver at least one 50bps cut at one of the three remaining meetings.
I have a hard time seeing that at the September 18th unless employment data takes a major turn south – you could make the case that last week’s BLS revision, which effectively wiped 818,000 jobs from the YTD job growth numbers should have creative enough concern, but the Fed projections below are hot off the press and include the BLS revisions already.
I say this because I was asked earlier today how the September cut would impact the financial markets…my answer, the cut is already fully priced-in… plus some. Mortgages were sharply unchanged today, the 10yr remains around 3.81 and stocks are mixed.
2. Remember rates just last October were near 8% - thus, we've already had a drop of more than 150 basis points or 1.500% in rates - if you took out a mortgage last fall - you may want to look at refinancing.
3. The Freddie Mac Survey is an average of rates and their average is 6.46% but again this is an average - for example our same rate is about .375% below this average on a conventional mortgage.
Odds & Ends -
Even with the above good news consumer confidence in housing continues to decline - personally I think that has a lot to do with the lack of housing affordability more than anything.
The Delinquency Rates for Multi-Family Housing is rising. When you build too many apartments with rents that people can't afford bad things happen.
Are Homes Overvalued? High home values have been great for homeowners - the problem is that the average home is going up so much that the average family cannot purchase one. Eventually that will cause an issue for everyone in my opinion.
Inflation-adjusted home prices today are almost 100% higher than the long-term, 130-year average. Only 2x in US history where this has ever happened: 2006 and right now. Note how from 1890 to 2000, home prices were closely linked to inflation and never entered a national bubble.
US home prices rose 5.4% year-over-year in June and hit a new all-time high. The Case-Shiller Home Price Index, which tracks the purchase prices of single-family homes, is up 51% over the last 4 years. This is an even larger increase than during the 2000s housing bubble when prices jumped by 49% from 2002 to 2006.The index tracking the 20 largest cities also jumped 6.5% year-over-year in June and reached a new record.
Housing Affordability Issues in an Easy to Read Graphic -
Ending on a Positive Note (In Addition to Lower Rates) -
In just over 24 Hours FOOTBALL IS BACK AT DKR!!
May you all have an Amazing-Enjoyable-Safe Labor Day Weekend and Here's to a Magical Season for The University of Texas Longhorns!
Always happy to answer questions ITT or via DM
Hook 'Em!
MH
🤟
The data is well researched from various reliable sources and is a weekly accumulation of different data that can drive the real estate market up & down.
Thus, it is fact based and only analyzing the data/trends without regard to political bias.
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".
Texas Leads the Way in New Home Construction -
Texas holds 4 of the Top 5 Cities in the nation for Top 50 Markets for New Construction with Texas and Florida representing one third of the entire list. Apparently for now Dallas > Houston
- Dallas-Fort Worth-Arlington, TX (42,840 closings)
- Houston-Pasadena-The Woodlands, TX (32,791 closings)
- Phoenix-Mesa-Chandler, AZ (21,784 closings)
- Austin-Round Rock-Georgetown, TX (18,632 closings)
- San Antonio-New Braunfels, TX (17,002 closings)
On the national level inventory ticked lower to a level of 462,000 homes for sale or a 1.1% decrease. The number of homes for sale on the market stood at 7.5 months' supply at the current sales pace, which would indicate a buyers market if it weren't for the lean level of existing homes on the market. Combining the two markets places us at 4.5 months' supply, which still represents that sellers are in control when it comes to achieving their higher sales price targets.
Powell at Jackson Hole Almost Guarantees a Rate Cut -
FED Chairman Powell hit the road last week and delivered prepared remarks at the Fed’s Jackson Hole Monetary Policy Symposium all but confirming a September rate cut. During the speech, he cited a cooling labor market and inflation closing in on the Federal Reserve’s 2% annual target as reasons the Fed is ready to pivot, stating, “The time has come for policy to adjust”. However, Powell didn't provide the markets with any additional specifics, only that "the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
30-year fixed mortgage rates have dropped to 6.46% according to Freddie Mac's latest survey, while the 10-year treasury has fallen to 3.84%, moving the spread between the two to 2.60% as mortgage lenders adjust their margins. Although the improving spread is welcome news as it continues to improve mortgage rates, it's still off roughly 75 basis points from its historical average. If the spread were to return to its historical average, we would be looking at 30-year fixed mortgage rate of 5.75%, opening up more refinance opportunities and get additional home sellers and buyers off the sidelines.
Couple of Notes to the Above -
1. Likely the Rate Cut is already priced into the markets - that's how markets work in general - markets move then the news hits the public - here is some guidance we received earlier this week from our secondary department that prices our mortgages:
Quiet start to the week here as we begin to wind down summer. Data is light on the calendar this week, though we do get Core PCE, the Fed’s preferred inflation indicator, and Q2 GDP – both are important to the Fed and could offer some guidance on the future of Fed interest rate policy.
With Jackson Hole now in the rearview, markets are pricing in 100bps of rate cuts for the remainder of the year, which means the Fed will have deliver at least one 50bps cut at one of the three remaining meetings.
I have a hard time seeing that at the September 18th unless employment data takes a major turn south – you could make the case that last week’s BLS revision, which effectively wiped 818,000 jobs from the YTD job growth numbers should have creative enough concern, but the Fed projections below are hot off the press and include the BLS revisions already.
I say this because I was asked earlier today how the September cut would impact the financial markets…my answer, the cut is already fully priced-in… plus some. Mortgages were sharply unchanged today, the 10yr remains around 3.81 and stocks are mixed.
2. Remember rates just last October were near 8% - thus, we've already had a drop of more than 150 basis points or 1.500% in rates - if you took out a mortgage last fall - you may want to look at refinancing.
3. The Freddie Mac Survey is an average of rates and their average is 6.46% but again this is an average - for example our same rate is about .375% below this average on a conventional mortgage.
Odds & Ends -
Even with the above good news consumer confidence in housing continues to decline - personally I think that has a lot to do with the lack of housing affordability more than anything.
The Delinquency Rates for Multi-Family Housing is rising. When you build too many apartments with rents that people can't afford bad things happen.
Are Homes Overvalued? High home values have been great for homeowners - the problem is that the average home is going up so much that the average family cannot purchase one. Eventually that will cause an issue for everyone in my opinion.
Inflation-adjusted home prices today are almost 100% higher than the long-term, 130-year average. Only 2x in US history where this has ever happened: 2006 and right now. Note how from 1890 to 2000, home prices were closely linked to inflation and never entered a national bubble.
US home prices rose 5.4% year-over-year in June and hit a new all-time high. The Case-Shiller Home Price Index, which tracks the purchase prices of single-family homes, is up 51% over the last 4 years. This is an even larger increase than during the 2000s housing bubble when prices jumped by 49% from 2002 to 2006.The index tracking the 20 largest cities also jumped 6.5% year-over-year in June and reached a new record.
Housing Affordability Issues in an Easy to Read Graphic -
Ending on a Positive Note (In Addition to Lower Rates) -
In just over 24 Hours FOOTBALL IS BACK AT DKR!!
May you all have an Amazing-Enjoyable-Safe Labor Day Weekend and Here's to a Magical Season for The University of Texas Longhorns!
Always happy to answer questions ITT or via DM
Hook 'Em!
MH
🤟
