Episodes

  • Housing Unfrozen? 2025's Mortgage Rate Rollercoaster & What It Means For You

    Housing Unfrozen? 2025's Mortgage Rate Rollercoaster & What It Means For You
    Mar 3 2025

    Key Topics:

    Inventory Check-Up: National inventory is up nearly 30% year-over-year, signaling relief for buyers, and Altos Research expects this growth to continue. However, new listings are still not abundant, and the pace of inventory growth may be capped.

    Regional Hotspots: California and Arizona lead inventory growth, while Texas and Florida, previously frontrunners, are now lagging. Florida has the highest inventory of any month on record.

    Price Trends: Home price appreciation is slowing, with some experts predicting further deceleration. Nationally, prices are just slightly above last year's levels, but the rate of growth is down.

    Compression: Home prices are compressing, with smaller increases compared to previous years.

    Price Cuts: A growing percentage of homes are undergoing price reductions, indicating weakening demand.

    Mortgage Rate Impact: Mortgage rates remain a critical factor. Rates near 6% stimulate buyer demand, while higher rates can lead to price adjustments. Economic uncertainty may push rates down, but inflation data could reverse this trend.

    Affordability Crisis: Affordability worsened in January, with mortgage payments rising. The Mortgage Bankers Association's Purchase Applications Payment Index reflects this strain.

    Demographic Impact: Housing affordability is declining across all racial and ethnic groups.

    New Construction Dynamics: New-home sales represent a high percentage of the market. Builders are using incentives such as mortgage rate buy-downs and price reductions to attract buyers. Townhome growth is notable.

    Regional Rundown:Northeast: Strong home price growth.

    South: Sluggish growth in some areas; falling prices in certain Florida metros.

    West: Inventory increasing.

    Pending Home Sales: Pending home sales dipped in January, and the Pending Home Sales Index hit an all-time low, suggesting fewer closings this spring.

    Regional Differences: The South experienced the greatest falloff in contract signings.

    Sentrilock Home Showings Report: SentriLock home showings were up 4% year-over-year.

    Expert Corner:

    Treasury Secretary Scott Bessent: Predicts the housing market will "unfreeze" soon.

    Altos Research: Expects inventory growth to be capped.

    Zillow: Forecasts slower home price growth.

    National Association of REALTORS® Chief Economist Lawrence Yun: Notes that elevated home prices and higher mortgage rates strained affordability.

    Predictions and Outlook:

    Mortgage Rate Forecasts: Experts predict mortgage rates will moderate, with potential volatility based on economic data and policy changes.

    Housing Market Projections: Modest increases in new-home construction and sales are expected.

    Actionable Advice:

    For Buyers: Be ready to act quickly, get pre-approved for a mortgage, and shop around for the best rates.

    For Sellers: Consider offering price reductions or other incentives to attract buyers.

    Conclusion: The housing market in 2025 is a puzzle with pieces that don't quite fit. Rising inventory offers hope, but affordability remains a major hurdle. Monitoring mortgage rates, economic data, and regional trends is crucial for navigating this complex landscape.
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    21 mins
  • Decoding the 2025 Housing Market: Gen Z, Musk, and Mortgage Mayhem

    Decoding the 2025 Housing Market: Gen Z, Musk, and Mortgage Mayhem
    Feb 24 2025
    Welcome to Housing Unhinged, the podcast that cuts through the headlines and dives deep into the data to reveal what's really happening in the housing market. In today's episode, we're tackling the big question on everyone's mind: are we headed for a crash, or will prices simply plateau? We'll analyze the latest trends in home prices, mortgage rates, inventory, and buyer behavior to give you a clear picture of what to expect this spring.Home Prices: Flat is the New Up?Home price appreciation is slowing: Across the country, home prices are only slightly higher than last year. In many markets, prices are below last year's levels, with some weeks showing price declines."Virtually flat": One expert considers home prices as "virtually flat" year-over-year, with real terms being negative.Regional differences: The Sun Belt markets have higher inventory and are more likely to see price declines, while northern cities have tight inventory and potential price appreciation.High-end properties are selling quickly: Well-priced properties are still selling fast in most areas.Price cuts are common: A significant percentage of homes on the market have taken price cuts.Mortgage Rates: Stuck in Neutral?Rates remain elevated: Mortgage rates have been hovering around 7%, impacting buyer demand.Small fluctuations: Rates have seen small declines, but mortgage applications have dipped.Affordability challenge: High home prices combined with mortgage rates make affordability a major concern.Impact of Fed policy: The Federal Reserve's actions and inflation data will significantly influence future mortgage rate trends.Expert predictions: While rates are expected to moderate, the timing and extent of any decreases remain uncertain.Inventory: A Mixed BagInventory is growing: There are more homes on the market now than last year.Forecasts vary: Some forecasts predict continued inventory growth, while others anticipate tightening if mortgage rates fall.New listings: New listings are up compared to last year, but still below pre-pandemic levels.Negotiating power: Increased inventory is giving buyers more negotiating power. Homes are selling for less than the asking price.Days on market: Homes are taking longer to sell, indicating a shift in market dynamics.Buyer Behavior: Cautious Optimism?Weak demand: Overall, buyer demand remains weak.First-time buyers: The share of sales to first-time buyers remains low.Cash buyers: A significant portion of transactions are all-cash, indicating that many buyers are not reliant on mortgage rates.Gen Z: Generation Z is finding affordable homes in specific markets, particularly in the Midwest and South.Sluggish start: Despite optimism for a stronger sales year, the market has had a slow start.Government and Policy Impacts:HUD changes: Potential cuts to HUD staff and programs could impact disaster recovery, rental assistance, and fair housing.CFPB uncertainty: Changes at the Consumer Financial Protection Bureau could affect consumer protection.FHA layoffs: Potential layoffs at the Federal Housing Administration could disrupt the mortgage industry.Government spending: Efforts to reduce government spending could influence mortgage rates.Regional Analysis:Northeast: Sales decreased, but prices increased.Midwest: Sales increased, and prices increased.South: Sales decreased, and prices increased.West: Sales decreased, and prices increased.Builder Confidence:Sentiment falls: Builder confidence has dipped due to concerns about material costs, labor shortages, and mortgage rates.Sales expectations: Sales expectations for the next six months have fallen.Conclusion:The housing market in early 2025 is complex. While some indicators point to a potential slowdown or price correction, other factors, such as limited inventory in certain markets, could keep prices stable. The impact of government policies and economic conditions remains a significant uncertainty.Disclaimer: This podcast is for informational purposes only and does not constitute financial advice. Consult with a qualified professional before making any investment decisions.
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    22 mins
  • AFFH Under Attack: How DOGE's HUD Cuts Could Reshape Your Neighborhood

    AFFH Under Attack: How DOGE's HUD Cuts Could Reshape Your Neighborhood
    Feb 17 2025
    DOJ vs. Zillow and NAR: The Department of Justice is scrutinizing a case involving Zillow and the National Association of REALTORS® (NAR), raising concerns about potential antitrust violations related to NAR's "no-commingling" policy.The DOJ is worried that a previous court decision in favor of Zillow could set a precedent that allows organizations to evade antitrust laws.At issue is NAR's commingling rule, which the DOJ suggests was effectively mandatory for Zillow, even though it was "optional".REX, a low-fee brokerage, initially sued Zillow in 2021, claiming that Zillow used deceptive practices to hide non-MLS listings, thereby reducing traffic to those listings.Zillow stated that the changes were made to comply with NAR's no-commingling policy and that they have advocated against the rule.The DOJ filed an amicus brief arguing that the court's approach was incomplete and could allow associations like NAR to evade antitrust scrutiny with optional rules.HUD's Transformation Under DOGE: The Department of Housing and Urban Development (HUD) is undergoing significant changes following the arrival of the Department of Government Efficiency (DOGE).Scott Turner, the new secretary of Housing and Urban Development, announced $260 million in savings. However, the sources of these savings have not been identified.Mass layoffs at HUD are expected, potentially cutting the staff by half, with impacts on civil rights enforcement, data gathering, and disaster recovery.The American Federation of Government Employees (AFGE) National Council 222 stated that the cuts would affect offices that enforce civil rights laws, compile data about the housing market, and rebuild communities after disasters.Turner has expressed intentions to roll back the Affirmatively Furthering Fair Housing (AFFH) rule, which was originally enacted during the Obama administration.Market Conditions and Inventory: Analysis of current housing market data reveals a subtle but important trend: potential home sellers are seeing weak demand and choosing not to list their properties.While inventory isn't shrinking yet, the trend suggests fewer home sellers, which could keep a lid on supply growth.New listings are only averaging a 1% to 2% increase each week, and one week showed fewer sellers than the previous year.Mike Simonson from Altos Research noted that after a period of normalization with more sellers, the housing market appears to be stagnating again.Fewer sellers imply a cap on inventory growth, even with weak demand, leading to fewer sales overall.Price reductions are increasing, which is unusual for this early in the season, indicating weaker conditions for home prices in 2025.The median price for single-family homes is $425,000, unchanged from last year, and homes going into contract are priced at $389,000, only 2.4% higher than the previous year.New contracts for single-family homes are down 5% compared to the same week last year, suggesting a continued slow purchase market.Available inventory of unsold single-family homes fell by 40 basis points, with 632,000 homes on the market.Off-MLS Listings: Selling homes off the Multiple Listing Service (MLS) can have negative financial impacts.Homes sold off the MLS typically sell for $4,975 less than those listed on the MLS, a median loss of 1.5% nationwide.In California, sellers gave up more than $30,000 by selling off the MLS.Some brokerages are steering sellers to list on private networks without adequately highlighting the potential negative price impacts.A Zillow/Harris Poll survey found that 63% of recent home sellers said their agent recommended listing on a private listing network.81% of Americans believe it is important for their home listing to be viewable for free to the public.Sellers in urban homes experienced the most significant median loss at 2%, compared to 1.5% in suburban areas and 0.9% in rural areas.Almost all buyers (91%) believe they should be able to see all listings for free and without barriers.Challenges for Veteran Homebuyers: Veterans face unique challenges in achieving homeownership.Many consider homeownership the pinnacle of achievement and prosperity, especially for Veterans.The number of financial institutions servicing home loans for Veterans has declined, leaving them with fewer options.Some lenders lack sufficient expertise in military benefits, compensation, and pension structures, leading them to prematurely reject military homebuyers.Unexpected deployments or frequent relocations can negatively impact Veterans' credit scores, leading to misguided lending decisions.Industry leaders need to educate themselves about the benefits available to military homebuyers and support opportunities to help servicemembers learn more about their entitled benefits.Additional Points:MetroList, Northern Nevada Regional MLS, and Oregon Data Share have formed a technology collaboration to share real estate transaction data across California, Nevada, and Oregon.NAR spent $86.3 ...
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    27 mins
  • Migration Impact: How 2.8 Million Newcomers Shape Real Estate

    Migration Impact: How 2.8 Million Newcomers Shape Real Estate
    Feb 10 2025
    Executive Summary:This document synthesizes information from multiple sources to provide an overview of the real estate market and related economic trends in early 2025. Key themes include a stabilizing but still high mortgage rate environment, shifts in population and migration patterns, and varied performance across residential and commercial real estate sectors. The data suggests a complex market landscape with both opportunities and challenges for real estate professionals and consumers.I. Population and Migration TrendsOverall Growth: The US population grew at its highest rate since 2001, primarily driven by international migration, which accounted for 84% of total growth.Birth Rate: While birth rates are declining nationwide, some states saw an increase in 2024, with Idaho and Montana leading with 2.2% growth.Natural Change: Missouri showed significant improvement in natural population change, moving from more deaths than births in 2023 to a natural increase in 2024.Domestic Migration: Texas and the Carolinas experienced significant net domestic migration gains. Utah showed the largest growth with nearly seven times more movers in 2024.Net Migration: Florida and Texas were the leaders in net migration gains.Significance: Domestic migration is seen as a powerful driver of economic and demographic change, providing areas with needed skills and resources. A positive natural change indicates long-term stability and a younger population."Last year, the U.S. population grew at its highest rate since 2001, largely driven by a surge in international migration, which accounted for 84% of the nation’s total population growth." - Behind the Numbers: Top 15 States for Population and Migration Trends in 2024II. Mortgage Rates & Economic FactorsMortgage Rate Stabilization: Mortgage rates have stabilized in the upper-6% range, with the 30-year fixed rate averaging around 6.89% in early February 2025, though some sources report rates closer to 7%.Impact of Tariffs: The recent announcement and subsequent pause of tariffs have created market volatility, impacting treasury yields, but not significantly affecting mortgage rates. As Zillow notes, "mortgage rates did not follow suit" the declines in treasury yields.Jobs Report: A weaker than expected January jobs report (143,000 nonfarm payroll jobs) has dampened hopes for an immediate Federal Reserve interest rate cut.Future Rate Expectations: There are varied predictions for interest rates in the short-term. Some experts predict mortgage rates to moderate, while others foresee a slight increase. However, the majority seem to agree that rates will likely remain near 7% until there's significant data showing slower job growth, lower inflation, or changes in fiscal policy.Consumer Sentiment: There is a mixed consumer sentiment with some "positive sentiment" from the new administration as mentioned by Danielle Hale, but no major changes are expected immediately.Rate Lock-in Effect: A higher percentage of homeowners now have mortgage rates above 6%, suggesting the “interest rate lock-in effect may be easing” as reported by “Mortgage rates dip, but demand still weak”.Latent Demand: Despite higher rates compared to last year, there is some latent demand in the market, as seen in purchase applications which are "modestly above what we saw a year ago," according to Sam Khater, Freddie Mac’s chief economist.Forecasts: 2025 Q1 average 30-year fixed mortgage rates vary from 6% (NAR) to 7.1% (Wells Fargo) - indicating the uncertainty in future rate trends."Mortgage rates have been stable over the last month and incoming data suggest the economy remains on firm footing." - Will Interest Rates Go Down in February? | Predictions 2025"The 10-year treasury moved lower over the last couple of weeks, which allowed mortgage rates to fall as well."* - Mortgage Rates Continue Edging DownwardIII. Residential Real Estate MarketHome Price Appreciation: While many metro areas experienced home price gains in the fourth quarter of 2024, the pace of appreciation has slowed.Price Reductions: An increasing percentage of homes are seeing price reductions, a trend that is unusual for this time of year and suggests weakness in buyer demand. 33.1% of homes have taken price cuts, up from 33% the week prior and even higher than 2023, “a prett(y) small move but in the wrong direction” according to housingwire.com. This is the first uptick in price reductions in January in over 10 years according to a HousingWire.com video.Regional Differences: The Midwest saw significant home price gains, with some metro areas experiencing increases of at least 14.9%. In contrast, many of the most expensive markets remained in California.Affordability: First-time buyers are facing slightly better affordability compared to the previous quarter, but still spend over 37% of their family income on mortgage payments. A significant percentage of markets require an income of $100k+ to afford a home with 10% ...
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    14 mins
  • Fed Decisions and the Real Estate Ripple Effect

    Fed Decisions and the Real Estate Ripple Effect
    Feb 3 2025
    Key Themes and Findings:A. Pending Home Sales Decline:After four months of gains, pending home sales experienced a setback in December 2024, decreasing by 5.5% month-over-month and 5% year-over-year. This decline is a significant reversal and is described as “not welcome news” for the industry.Quote: "After four straight months of gains in contract signings, one step back is not welcome news, but it is not entirely surprising. Economic data never moves in a straight line." - Lawrence Yun, NAR Chief EconomistAll four U.S. regions saw declines, with the West experiencing the most significant drop (10.3% month-over-month) followed by the Midwest (8.1%). The South (down 2.7%) and Midwest (down 4.9%) saw less dramatic drops.This is partly attributed to reduced affordability in higher-priced areas due to elevated mortgage rates.Quote: "Contract activity fell more sharply in the high-priced regions of the Northeast and West, where elevated mortgage rates have appreciably cut affordability." - Lawrence Yun, NAR Chief Economist.The Pending Home Sales Index (PHSI) dropped to 74.2 in December, with an index of 100 representing the 2001 contract activity level. The lowest point of 2024 was in July at 70.2Quote: "The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – slid 5.5% to 74.2 in December. Year-over-year, pending transactions declined 5.0%."B. Mortgage Rate Volatility and Affordability:Mortgage rates are hovering around 7%, with the 30-year fixed rate averaging 6.95%.Despite some stabilization, rates have not fallen significantly enough to boost buyer activity.There's no expectation that mortgage rates will change significantly in the coming months, with rates expected to stay within the 6-7% range, creating a sense of stability but also a barrier to entry for some buyers.Quote: "There is no expectation that mortgage rates will change in the coming months. Home buyers who are shopping should know that rates are expected to stay between 6-7%. As there is no expectation of change, stability in mortgage rates provides reassurance."Mortgage applications have decreased, influenced by holiday and inauguration weeks and potentially by a lack of confidence amid economic uncertainty.The Federal Reserve has paused interest rate hikes, holding the target rate at 4.25% - 4.5%. This pause adds uncertainty to the future of mortgage rates.Quote: "The Fed held interest rates as expected, at 4.25% to 4.5%, with the open question of how long this pause would continue. As economic data and the Fed respond to the new administration’s policy announcements, the mortgage market may experience continued volatility."C. Regional Disparities:The West and Northeast regions are experiencing the largest impact of higher mortgage rates on affordability.More affordable regions are seeing job and wage gains potentially having a more positive impact on home sales.The varying impacts underscore the complex nature of local markets that are affected differently by mortgage rates, job growth, and cost of living, and climate.D. Market Shifts and Inventory:There is a growing inventory of unsold homes, with single family homes now fractionally cheaper than the same time last year.New contracts pending are fewer than the previous year.The number of unsold single-family homes on the market is up 26.5% from last year, indicating a shift in market dynamics.Quote: "There are now 637,000 single family homes unsold on the market that's up 7/10 of a percent from last week and is 26.5% more than last year."E. New Construction and Home Sizes:New home sizes, especially in the West, have decreased due to local policies (like tree preservation ordinances) rather than buyer preferences, forcing builders to construct smaller homes.Quote: "Effectively, what's happening is the cities are preserving more trees. They’re preserving larger setbacks. They're shrinking the amount of lot that we can cover with a new house, and the builders, therefore, are being forced into smaller houses."Despite the decrease, buyers generally are looking for the biggest homes they can afford.F. NAR Settlement & Legal Landscape:The final judgment on the NAR commission deal is in place, impacting seller and buyer transactions across the nation, even on non-Realtor MLSs.Quote: "For the avoidance of doubt, this injunction extends to claims arising from or relating to transactions where Settlement Class Members either sold or purchased a home on any multiple listing service nationwide, regardless of affiliation or association with NAR or not, and thus includes, e.g., NWMLS, WPMLS, and REBNY/RLS,"Further lawsuits against brokerages and MLSs continue, with a preliminary settlement reached by eight defendants, indicating ongoing industry-wide legal changes.G. Technology & MLS Innovations:Multiple Listing Services (MLSs) are evolving, with some moving towards allowing non-Realtor access.Quote: "A recent poll by T3 Sixty found ...
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    17 mins
  • Real Estate Power Struggle: Who Controls the Listings?

    Real Estate Power Struggle: Who Controls the Listings?
    Jan 27 2025
    Executive Summary:The real estate market in early 2025 is characterized by a complex interplay of factors, including fluctuating mortgage rates, shifting inventory levels, and evolving buyer and seller behaviors. While some indicators show positive growth, particularly in home sales, there's an overall sense of uncertainty due to high mortgage rates and potential economic shifts. There's also an undercurrent of debate about transparency and access to property information, and a growing awareness of the importance of the rental market. The sources highlight a market in transition, where strategic adaptability will be key for both agents and clients.Key Themes & Findings:Mortgage Rate Volatility and Impact:Fluctuating Rates: Mortgage rates remain a significant factor influencing the market. After a rise to above 7%, they have dipped slightly below 7% at the time of these reports, with the 30 year fixed rate averaging 6.96% according to Freddie Mac. However, economists predict that the rates are likely to stay in the mid to high 6% range in the near future.Impact on Sales: High mortgage rates have demonstrably slowed buyer activity. New contract signings for home purchases were down 10% year-over-year, which indicates that the sales gains from late 2024 have been reversed. This has also led to price gains from 2024 mostly evaporating.Predictions: While some experts predict a gradual decline, others caution that rates could remain elevated due to ongoing inflation concerns and potential policy shifts from the Federal Reserve. Fannie Mae has revised its forecast, expecting rates to end the year at 6.5%, up from its previous 6.2% forecast. This highlights the uncertainty and the potential for further upward revisions.Inventory and Sales Trends:Inventory Increase: The number of unsold homes is rising, with single-family homes at 632,000 (up 1.5% from the previous week), and a sharp increase of unsold condo inventory (177,000, 30% more than last year).Demand Weakness: Inventory growth is being driven by weak demand rather than a surge in supply, with 10% fewer purchase offers compared to the same week last year. Slightly fewer sellers than a year ago are putting listings on the market but inventory is building faster than the year prior.Regional Variations: While existing home sales increased across the US, the Northeast led the way with a 10.4% increase year-over-year. The Midwest saw a slight decrease of 1%, but all four regions showed accelerated home prices year-over-year.Pricing and Negotiation:Price Pressure: Home price gains from 2024 have largely evaporated, with the median price of newly pending sales essentially unchanged year-over-year. While the median price of all homes currently under contract is still up, there are signs that these gains will not continue with current market conditions.Price Reductions: There's a growing trend of price cuts on existing listings due to weakened demand, indicating that sellers are recognizing the need to adjust to market conditions.Concessions: Sellers are increasingly using concessions, including mortgage rate buydowns and repair credits, to close deals. New construction builders are successfully using concessions due to their ability to hold inventory for longer and effectively market these incentives.Private Listing Networks & Transparency:Debate over Transparency: A significant point of contention revolves around the use of private listing networks and efforts to withhold property information from buyers and the public in general. Some brokers have attempted to create private listing networks and conceal property history, particularly days on market (DOM).CRMLS Stance: CRMLS (California Regional Multiple Listing Service) has rejected demands to hide property information and create private networks that would exclude unrepresented consumers, citing potential antitrust and liability concerns, as well as misleading buyers and sellers. They support mandatory cooperation and transparency.Alternative Solutions: The use of non-exclusive listing agreements and Non-Disclosure Agreements (NDAs) is suggested as a way to protect seller privacy for high-value properties.Final Offer's PX Platform: This platform allows agents to share pre-market or off-market properties within their brokerage or directly with clients, before listing on the MLS.Survey Results: Of sellers whose agents recommend listing on a private network, 43% end up switching to the Multiple Listing Service.Days on Market (DOM) and Informed Decisions:DOM as a Tool: Days on Market (DOM) is recognized as a valuable tool for both buyers and sellers. It helps buyers assess a property's appeal and negotiate prices, and sellers with pricing strategy and market positioning.Misrepresentation Concerns: There is concern about brokers intentionally misrepresenting DOM to make it look like a property sold faster than it did, potentially misleading buyers and sellers.Rental Market Significance:Growing Importance: The ...
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    14 mins
  • Mortgage Madness: Rates Touching 7% Again

    Mortgage Madness: Rates Touching 7% Again
    Jan 20 2025

    Key Themes:

    Rising Mortgage Rates and Market Uncertainty: Mortgage rates have surged above 7%, defying expectations and impacting affordability. This has caused some buyers to delay purchases, leading to fewer sales despite an increase in new listings. Experts are divided on the direction of rates in 2025, with some predicting moderation while others anticipate further increases.

    Shifting Inventory Dynamics: After years of tight inventory, more sellers are entering the market. This is likely driven by rising mortgage rates, homeowners no longer feeling the “lock-in effect”, and a desire to capitalize on still-high home values. The increase in listings is contributing to a slowdown in home price growth, with some experts predicting a possible decline in prices if the trend continues.

    Challenges and Opportunities for the Mortgage Industry: The rise of the gig economy requires lenders to adapt to non-traditional borrowers. Tech giants are exploring the mortgage space, potentially disrupting traditional lending models. Meanwhile, the possibility of space-based mortgages emerges as private companies venture into off-planet settlements.

    Impact of the Los Angeles Wildfires: The recent wildfires in Los Angeles have devastated communities and will have a lasting impact on the housing market. Rebuilding efforts are expected, but experts are calling for a focus on resilience and sustainability in future development.

    Political Landscape: The appointment of a new HUD Secretary under the returning Trump administration brings both optimism and concern. The industry awaits policy changes and their potential impact on affordable housing, lending practices, and the overall housing market.

    Important Data Points:

    Mortgage Rates:The 30-year fixed-rate mortgage averaged 7.04% the week of January 16th, 2025, marking the fifth consecutive weekly increase and the first time rates have crossed the 7% mark since May 2024. (Freddie Mac, Realtor.com)

    A year ago, 30-year rates averaged 6.6%. (Freddie Mac)

    The average rate on a 30-year fixed-rate mortgage hit 6.93% during the second week of January, the highest it has been since early July 2024. (Freddie Mac)

    Despite rate cuts by the Federal Reserve in late 2024, mortgage rates continued to climb due to a strong economy and concerns about inflation. (Freddie Mac, Housing Market Decoded)

    Housing Starts and Inventory:Total inventory of homes for sale dipped to 624,000 this week, surprising analysts. (Altos Research)

    There are 24% more homes on the market than a year ago, but still 19% fewer than in January 2018. (Altos Research)

    There were 45,000 new listings for single-family homes across the country this week, a 12% increase year-over-year. (Altos Research)

    Single-family housing starts increased to 1,050,000 (SAAR) in December, up 3.3% from November but 2.6% lower than in December 2023. (Zillow Research)

    Home Prices and Sales:There were just under 41,000 newly pending contracts for single-family homes this week, a 3% decrease year-over-year. This divergence between rising listings and falling sales volume is a significant shift. (Altos Research)

    Home price growth accelerated in the fourth quarter of 2024, following two quarters of deceleration. (Fannie Mae)

    The median price for homes entering into contract this week was just under $375,000, barely above prices paid a year ago. (Altos Research)

    The median price of all homes currently in contract is $395,000, just under 4% higher than a year ago. (Altos Research)

    Quotes:

    "The underlying strength of the economy is contributing to this increase in rates." - Sam Khater, Chief Economist at Freddie Mac

    "Year-over-year home price growth accelerated in the fourth quarter, following back-to-back quarters of deceleration.” - Mark Palim, Senior Vice President and Chief Economist at Fannie Mae

    "Inventories of existing homes for sale have improved from a year ago but remain historically low, due largely to the so-called ‘lock-in effect.’" - Mark Palim

    "The market senses some uncertainty on the part of the Fed when it comes to inflation, and what looks like a plan that will keep borrowing costs ‘higher for longer.’“ - Rick Sharga, CEO at CJ Patrick Company

    "I mean, to me, it's just very obvious what's happening — it's nature rebelling against us. We maxed out the credit card." - Christopher Hawthorne, Chief Design Officer for the City of Los Angeles, discussing the LA wildfires.
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    24 mins
  • Exploring the Impact of Wildfires on Real Estate

    Exploring the Impact of Wildfires on Real Estate
    Jan 13 2025

    Key Themes and Facts:

    Mortgage Rate Volatility: Mortgage rates rose for the fourth consecutive week, reaching 6.93% for a 30-year fixed-rate mortgage. This increase, attributed to a strong economy and persistent inflation, is causing buyer jitters. Experts anticipate rates to moderate or potentially decline throughout 2025, with predictions ranging from 6% to 6.65% for Q1 2025. However, unexpected global events or stubborn inflation could lead to further increases.

    "The continued strength of the economy has put upward pressure on mortgage rates, and along with high home prices, continues to impact housing affordability." - Sam Khater, Freddie Mac’s chief economist

    Decreasing Mortgage Applications: Mortgage applications dropped to their slowest pace in nearly a year as higher rates discourage potential homebuyers. Purchase applications for both conventional and government loans have declined.

    "Applications decreased last week as rising mortgage rates continued to discourage buyers from entering the market and put a damper on purchase activity." - Joel Kan, MBA’s vice president and deputy chief economist

    Slight Dip in Housing Sentiment: Despite ending 2024 substantially higher than the previous year, the Fannie Mae Home Purchase Sentiment Index® (HPSI) showed a slight month-over-month decrease in December. This dip reflects ongoing affordability challenges, with only 22% of consumers believing it's a good time to buy a home.

    "While respondents remain discouraged by the pandemic-era run-up in home prices and mortgage rates, the upward trend in homebuying sentiment in 2024 may reflect a slow acclimatization to the generally less-affordable market conditions." - Mark Palim, Fannie Mae senior vice president and chief economist

    Low Inventory Persists: A shortage of entry-level homes continues to plague the market, making it difficult for first-time buyers to enter. This limited inventory, coupled with higher mortgage rates, is further fueling a competitive market.

    "Silver Tsunami" Wealth Transfer: A significant wealth transfer is anticipated as baby boomers age, with a large portion expected to stay within families. This trend could impact the housing market as inherited properties change hands.

    Stronger than Expected Jobs Report: December's jobs report exceeded expectations, potentially signaling a continued strong economy. While this is positive overall, it could also lead to the Federal Reserve pausing rate cuts, potentially pushing mortgage rates higher.

    "This will push mortgage rates higher in the near term." - Mike Fratantoni, MBA senior vice president and chief economist

    Regional Variation in Affordability: While affordability remains a challenge nationwide, certain cities show promise for average wage earners. Toledo, Ohio, leads with 89.1% of homes affordable for local earners, followed by other Midwestern and Southern cities.

    Homeowner Reluctance to Sell: Approximately one-third of homeowners say they will never sell their homes, primarily due to affordability concerns in the current market. This "lock-in" effect further restricts inventory and adds to the competitive pressures for buyers.

    Other Notable Trends:

    The luxury housing market is expected to perform well in 2025.

    Buyers increasingly prefer move-in ready, turnkey homes, despite the higher price premium.

    Rising property taxes are becoming a concern for homeowners, driven by skyrocketing home values.

    Legal challenges against the National Association of REALTORS® (NAR) are ongoing, with lawsuits questioning their membership structure and policies.

    Recommendations for REALTORS®:

    Educate clients on market volatility: Emphasize the importance of understanding current market conditions, including fluctuating mortgage rates and the competitive landscape.

    Showcase inventory strategically: Highlight the unique features and benefits of available properties, particularly move-in ready homes that meet buyer preferences.

    Leverage local market knowledge: Provide insights on regional variations in affordability and highlight areas that offer opportunities for average wage earners.

    Advise on negotiation strategies: Help buyers navigate a competitive market and prepare strong offers. Counsel sellers on setting realistic expectations.

    Stay informed on legal developments: Keep abreast of any changes to NAR policies and regulations that may impact the real estate industry.
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