Zegras11
Footballguy
another bizarre comment. I'm at the tail end of the boomers. How does my wealth get "transferred to the uber wealthy?"
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Mortgage Rates (1 Viewer)
- Thread starter MechEng
- Start date
"Was it over when the Germans bombed Pearl Harbor?!?!"
Nugget
Footballguy
My best guess is medical bills and long term health care.
The Z Machine
Footballguy
Where is wealth accumulating over the last 20 years. It ain't in the middle class.
I was being facetious using the word "rigged". Rather, I mean that the timing for almost all boom / bust cycles have favored boomers over Gen X and certainly over millennials. It certainly feels like boomers always seem to come out on top over other generations.
Zegras11
Footballguy
That's called demographics. The boomer generation is by far the largest group ever .
Caused by the post WWII baby boom. Japan collapsed much, much earlier on these demographic cycles because they did not have a post war baby boom like the US did.
It has nothing to do with anything being rigged. It has to do with the amount of people and all the major buying cycles they go through during their lives.
I read some great books around 2000 on these demographics. One guy hit it right on the nose that everything would start collapsing 4th Q of 2008, and it did.
With birth rates going down and boomers starting to pass, I doubt we ever see anything like how the economy was for the boomers for a long time..
Chadstroma
Footballguy
Every older generation is going to generally have an advantage over the younger generations in terms of wealth creation. Simply, time is on their side. It is the same concept as compounding interest.... over time it becomes a very powerful thing.
Beyond that, I think there are a ton of other factors that have given an easier road forward than later generations but to lay it out would hit on too many political and social issues that would get the board Gestapo wanting to see my paperwork.... so I will leave it there.
-OZ-
Footballguy
Every generation
Blames the one before
And all of their frustrations
Come beating on your door
I know that I'm a prisoner
To all my Father held so dear
I know that I'm a hostage
To all his hopes and fears
I just wish I could have told him in the living years
Oh, crumpled bits of paper
Filled with imperfect thought
Stilted conversations
I'm afraid that's all we've got
You say you just don't see it
He says it's perfect sense
You just can't get agreement
In this present tense
We all talk a different language
Talking in defence
Say it loud (say it loud), say it clear (oh say it clear)
You can listen as well as you hear
It's too late (it's too late) when we die (oh when we die)
To admit we don't see eye to eye
So we open up a quarrel
Between the present and the past
We only sacrifice the future
It's the bitterness that lasts
So don't yield to the fortunes
You sometimes see as fate
It may have a new perspective
On a different day
And if you don't give up, and don't give in
You may just be okay
So say it loud, say it clear (oh say it clear)
You can listen as well as you hear
Because it's too late, it's too late (it's too late)
When we die (oh, when we die)
To admit we don't see eye to eye
I wasn't there that morning
When my Father passed away
I didn't get to tell him
All the things I had to say
I think I caught his spirit
Later that same year
I'm sure I heard his echo
In my baby's new born tears
I just wish I could have told him in the living years
Say it loud, say it clear (oh say it clear)
You can listen as well as you hear
It's too late (it's too late) when we die (it's too late when we die)
To admit we don't see eye to eye
So say it, say it, say it loud (say it loud)
Say it clear (come on say it clear)
Say it loud
(Don't give up, don't give in and don't look away 'til it's too late)
Say it clear
Say it loud (say it loud, say it loud)
Blames the one before
And all of their frustrations
Come beating on your door
I know that I'm a prisoner
To all my Father held so dear
I know that I'm a hostage
To all his hopes and fears
I just wish I could have told him in the living years
Oh, crumpled bits of paper
Filled with imperfect thought
Stilted conversations
I'm afraid that's all we've got
You say you just don't see it
He says it's perfect sense
You just can't get agreement
In this present tense
We all talk a different language
Talking in defence
Say it loud (say it loud), say it clear (oh say it clear)
You can listen as well as you hear
It's too late (it's too late) when we die (oh when we die)
To admit we don't see eye to eye
So we open up a quarrel
Between the present and the past
We only sacrifice the future
It's the bitterness that lasts
So don't yield to the fortunes
You sometimes see as fate
It may have a new perspective
On a different day
And if you don't give up, and don't give in
You may just be okay
So say it loud, say it clear (oh say it clear)
You can listen as well as you hear
Because it's too late, it's too late (it's too late)
When we die (oh, when we die)
To admit we don't see eye to eye
I wasn't there that morning
When my Father passed away
I didn't get to tell him
All the things I had to say
I think I caught his spirit
Later that same year
I'm sure I heard his echo
In my baby's new born tears
I just wish I could have told him in the living years
Say it loud, say it clear (oh say it clear)
You can listen as well as you hear
It's too late (it's too late) when we die (it's too late when we die)
To admit we don't see eye to eye
So say it, say it, say it loud (say it loud)
Say it clear (come on say it clear)
Say it loud
(Don't give up, don't give in and don't look away 'til it's too late)
Say it clear
Say it loud (say it loud, say it loud)
Chadstroma
Footballguy
Canada's unprecedented housing crisis could be a warning sign for the US
Story by insider@insider.com (Eliza Relman)The average home value in Canada has more than doubled since 2011. The country is also almost certainly heading towards a recession — if it's not already in one — and the housing market is partly to blame, economists say.
The drivers? Demand has raced ahead of supply. The country simply isn't building enough housing. City governments, which largely control housing policy, are "biased towards homeowners and not towards renters," Concordia University economist Mosche Lander argued, supporting policies that limit homebuilding and keep home values elevated. Investors pouring money into real estate speculation haven't helped. And record population growth from immigration has only added to demand.
This might sound familiar. The combination of a housing shortage, rising interest rates, and investor speculation have all contributed to a severe housing affordability crisis in the US, as well. "It's similar, but worse" in Canada, Mike Moffat, senior director at the Smart Prosperity Institute at the University of Ottawa.
After more than 20 years of low interest rates, which pushed housing prices up, Canada's central bank recently raised its benchmark interest rate to a 22-year high of 5% in an attempt to control inflation.
Rising mortgage rates are particularly painful in Canada because the standard home mortgage has to be refinanced after five years and fully paid back after 25 years. This is a key difference between the US and Canadian housing markets, since the standard US homeowner gets a 30-year fixed-rate mortgage, protecting them from rate increases for decades.
In part as a result of this, Canadians are deeply in debt. The country has the highest household debt as a share of GDP in the G7 — and 75% of it is from mortgages.
"We have an imbalance — we have household debt-to-income ratios that are above what the US was before the global financial crisis," said Tony Stillo, director of Canada economics at Oxford Economics. The result is "unprecedented unaffordability," he added.
Moffat is concerned that as affordability crisis continues and immigration rates remain high, Canadians will blame high prices on immigration and seek to limit migration. Recent polling has found that a growing share of Canadians feel this way, threatening the government's liberal stance on immigration policy. But immigration is just one of many factors at play — Canada's housing crisis far preceded the rise in immigration.
"It's starting to cause backlash here, you're starting to see anti-immigration sentiment," Moffat said.
But unless things get dramatically worse in Canada, economists say American policymakers won't be spooked.
"If the market doesn't collapse, then America junior just kind of remains an interesting story, but not a policy lesson," Lander said.
Economists aren't predicting a repeat of the American housing market collapse of 2008 in Canada. The Canadian banking sector is more closely regulated than the US's. A handful of major banks dominate residential mortgages, so there's less competition and therefore less risky behavior than was common in the early-aughts US housing bubble when it comes to lending, Lander said.
With mortgage rates so high, home sales have declined recently. In October, home sales fell 5.6%. As a result, home prices overall have flattened somewhat. Stillo believes Canada's housing bubble has been slowly "deflating" for the last 18 months, despite an upswing in prices earlier this year.
"It's not a disorderly bursting, but definitely deflating, in my opinion, since the spring of 2022," he said.
Despite mortgage rates soaring last year, US housing prices only briefly declined for about five months before resuming their rise. This is in part because of the US's fixed-rate mortgages, which discourage those with low rates to sell their homes and sign up for today's much higher rates with a new home. This leads to low inventory, exacerbating supply issues.
The situation is so desperate that many Canadians are celebrating the drop in prices. Seventy percent of respondents to a recent Nanos Research/Bloomberg News poll said they would be "happy" or "somewhat happy" if home values declined. This is despite the fact two-thirds of Canadian households own their homes and could see housing equity drop alongside prices.
But there isn't consensus on if and when Canada's housing bubble will burst — or even if there is a bubble. Lander says there's no end in sight. While housing prices have flattened recently as demand softens, he says they show no sign of significantly declining. When the Canadian central bank lowers interest rates, which is expected as the recession deepens, that'll only juice demand for homes, he said.
"Even if housing prices come down, it's not going to be towards anything reflecting market value — that bubble will still be there," Lander said. "If the market hasn't imploded when interest rates are at a 25-year high, when those rates start coming down, the market is going to take off again."
Moffat doesn't think Canada has a housing bubble — he predicts that while prices are and will be volatile, they'll continue rising because the country simply doesn't have enough homes.
Like Americans, Canadians are increasingly worried about housing costs. They list inflation as their top concern, closely followed by housing, according to recent polling.
Canada's federal government has attempted to dampen demand and encourage home construction. Earlier this year, the government passed a few new laws, including banning most foreigners from buying homes in the country for two years, taxing investors who buy and quickly flip homes for a profit or speculate, and taxing vacant homes. While the measures have slowed demand, Lander said, they're not enough to reduce prices.
"The government's never going to be able to legislate their way to fair market value, so it's going to have to be something that's eroded away over decades," Lander said.
Chadstroma
Footballguy
As 30-year mortgage rates keep falling, 8% fades in rear-view mirror
Story by Jeff OstrowskiMortgage Rates Down
Mortgage rates dipped again this week, according to Bankrate’s national survey.
The average rate on 30-year fixed mortgages retreated to 7.55 percent this week, down from 7.66 percent the previous week, according to Bankrate’s weekly national survey of large lenders.
The recent reprieve could signal a prolonged drop in mortgage rates, says Lawrence Yun, chief economist at the National Association of Realtors (NAR). The average rate on 30-year home loans in October topped 8 percent, but that’s changing because of a number of factors, including a slowing job market and signs that the Federal Reserve’s ongoing war on inflation is working. Meanwhile, yields on 10-year Treasury bonds, an informal benchmark for 30-year mortgage rates, have dropped from 5 percent to 4.4 percent in recent weeks.
Yun expects mortgage rates to fall below 7 percent during the winter months. “I believe consumer price inflation will be much lower, and that will allow the Federal Reserve to cut interest rates,” Yun says.
The Fed doesn’t directly control mortgage rates, but it plays a pivotal role. The central bank sets policy that affects the cost of home loans. At the conclusion of its latest meeting on Nov. 1, the Federal Open Markets Committee decided to leave rates unchanged. Now, economists say, it appears that the central bank is done raising rates.
“Based on the weak job number and calming inflation, the bond market is forcing the Federal Reserve to consider lowering interest rates,” Yun said at a presentation last week in Anaheim, Calif.
What happened to mortgage rates this week
The 30-year fixed mortgages in this week’s survey had an average total of 0.31 discount and origination points.Over the past 52 weeks, the benchmark 30-year fixed-rate mortgage has averaged 6.95 percent. A year ago, the 30-year fixed-rate mortgage was 6.81 percent. Four weeks ago, that rate was 8.01 percent. The 30-year fixed-rate average for this week is 1.28 percentage points higher than the 52-week low of 6.27 percent.
How mortgage rates affect home affordability
The national median family income for 2023 is $96,300, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in October 2023 was $391,800, according to the National Association of Realtors. Based on a 20 percent down payment and a mortgage rate of 7.55 percent, the monthly payment of $2,202 amounts to 27 percent of the typical family’s monthly income.The sharp rise in mortgage rates over the past two years has squeezed affordability and sparked a slowdown in home sales. First-time buyers are especially challenged by this market. Home prices haven’t fallen significantly, and values are unlikely to decline, given the shortage of homes for sale.
“Higher mortgage rates have a dual impact on the housing market: reducing affordability for buyers and strengthening the rate lock-in for sellers,” says Odeta Kushi, deputy chief economist at First American. “The combination of reduced affordability and increased strength of the rate lock-in effect is likely to continue to suppress home sales because you can’t buy what’s not for sale, even if you can afford it.”
Reflecting the affordability squeeze, the median household income for homebuyers jumped to $107,000 in 2023 from $88,000 last year, according to NAR’s 2023 Profile of Home Buyers and Sellers.
Will mortgage rates go down?
Economists expected to see mortgage rates decrease by the end of 2023, but the strength of the U.S. economy has thrown a wrinkle into those predictions. So has the jump in 10-year Treasury yields.The Mortgage Bankers Association forecasts the 30-year fixed rate to be at 7.5 percent by the end of the year — a prediction that’s higher than its recent outlooks.
Mortgage rates are also chained to inflation, a metric the Fed has been moving to control. At its September and November meetings, the central bank opted to keep rates unchanged. While the Fed doesn’t directly set fixed mortgage rates, it does set the tone of the interest-rate environment — and as the central bank has boosted its policy rate from zero in early 2022 to a range of 5.25 percent to 5.5 percent now, mortgage rates have followed suit.
“There is room for mortgage rates to fall further,” says Lisa Sturtevant, chief economist at Bright MLS, a listing service in the mid-Atlantic region. “The gap between the 10-year Treasury yield and the 30-year fixed rate mortgage rate is historically around 180 basis points. While the gap has narrowed somewhat, the 30-year mortgage rate remains 280 basis points higher than the bond yield.”
massraider
Footballguy
Geez, Canada can't even get their own financial disasters, they have to steal all our ideas.
Chadstroma
Footballguy
I liked how the article called them America Jr.
FreeBaGeL
Footballguy
Did boomers really blame the generation before? Because that would just be the cherry on top. The generation that suffered through the great depression and multiple world wars and 6-day work weeks to leave the boomers set up with an economy where a family could own a great home and live a great life with one parent working an unskilled labor position capped at 40 hours per week with a pension while the other parent stayed home with the kids full time?
massraider
Footballguy
Yeah, and who the heck blames Gen X for anything? Maybe they should have, and Gen X should have wrested the controls of the government minivan from their parents, but I've never heard anyone say it.
I'm starting to think some of these lyrics might not be true.
Scoresman
Footballguy
This is why it's always cringeworthy when you hear boomers say things like "When I was your age I already owned a house and had two kids" when referencing generations younger than them.
-OZ-
Footballguy
How dare you question Mike or his mechanics!
-OZ-
Footballguy
Gen Xer here. Bought our first house at 25, had two kids by 28.
The Z Machine
Footballguy
The wealth "created" through home and stock ownership of the boomer generation will simply be transferred to the for profit health care, long term care, and nursing home corporations. The boomers will liquidate their wealth to preserve their lifestyles and prolong their lives as much as possible. Trillions will be spent to keep boomers alive 2 months longer (and likely with poor quality of life). The cost to their children and grandchildren will be the increasing unaffordability of housing, retirement, and education. The boomers parents sacrificed and set up institutions that helped their children immensely. The boomers tore it down because they were selfish.
HellToupee
Footballguy
To me “boomers” as the bogeyman seems like a crutch to lean on. I also definitely disagree that someone would flush away hard earned money in a nursing home to live a few more months. It’s an ugly existence there that I wouldn’t wish on anyone.
Blame the rich
Blame the rich
MAC_32
Footballguy
We've had a rough go of it financially to this point, but depending on AI's influence over the next decade or so I think those of us that have navigated the waters to this point are potentially positioned to cash in given the drastically changed market dynamics holy run-on sentence, Batman.
Chadstroma
Footballguy
Is the housing market going to crash? What the experts are saying
Story by Jeff OstrowskiMuch to the chagrin of would-be homebuyers, property prices just keep rising. It seems nothing — not even the highest mortgage rates in nearly 23 years — can stop the continued climb of home prices.
Prices increased once again in August, according to the latest S&P CoreLogic Case-Shiller home price index, with a 2.6 percent jump that more than doubled July’s increase and represents the seventh month in a row of gains. In another reflection of ongoing increases, the National Association of Realtors (NAR) reports that median home prices as of October were up more than 3 percent over last year — the fourth month in a row of year-over-year jumps.
So much for the idea that a “housing recession” would reverse some of the outsized price gains in homes. The U.S. housing market had finally started slowing in late 2022, and home prices seemed poised for a correction. But a strange thing happened on the way to the housing market crash: Home values started rising again.
NAR data shows that median sale prices of existing homes are near record highs. October 2023’s median of $391,800 is off the all-time-high of $413,800, but it’s the highest ever recorded for the month of October. (Seasonal fluctuations in home prices make June the highest-priced month of most years.) “The housing recession is essentially over,” says Lawrence Yun, NAR’s chief economist.
Home values have held steady even as mortgage rates soared to 8 percent in October, reaching their highest levels in more than 23 years. The culprit is a lack of housing supply. Inventories remain frustratingly tight, with NAR’s October data showing only a 3.6-month supply.
“You’re not going to see house prices decline,” says Rick Arvielo, head of mortgage firm New American Funding. “There’s just not enough inventory.”
Skylar Olsen, chief economist at Zillow, agrees about the supply-and-demand imbalance. Her latest forecast says home prices will keep rising into 2024 — welcome news for sellers but not so great for first-time buyers struggling to become homeowners. “We’re not in that space where things are suddenly going to be more affordable,” Olsen says.
In fact, lately we’ve seen quite the opposite. According to Realtor.com’s October 2023 Housing Market Trends Report, high mortgage rates have increased the monthly cost of financing the typical home (after a 20 percent down payment) by 7.4 percent since last year. That equates to $166 more in monthly payments than a buyer last October would have seen.
Taking all this into account, housing economists and analysts agree that any market correction is likely to be a modest one. No one expects price drops on the scale of the declines experienced during the Great Recession.
Is the housing market going to crash?
No. There are still more buyers than sellers, and that means a meaningful price decline can’t happen. “There’s just generally not enough supply,” says Mark Fleming, chief economist at title insurer First American Financial Corporation. “There are more people than housing inventory. It’s Econ 101.”Dave Liniger, the founder of real estate brokerage RE/MAX, says the sharp rise in mortgage rates has skewed the market. Many would-be buyers have been waiting for rates to drop — but if mortgage rates do decline, then new buyers could flood into the market, pushing up home prices.
“You’ve got an entire generation of pent-up demand,” Liniger says. “We’re in this fascinating position of tremendous demand and too little inventory. When interest rates do start to come down, it’ll be another boom-and-bust cycle.”
Lightbulb
Key housing market statistics
- According to Bankrate’s weekly national survey of large lenders, the average mortgage interest rate on a 30-year loan was 7.66 percent as of November 15 — near the highest level since 2000.
- Home sales fell 4.1 percent from September 2023 to October 2023, the National Association of Realtors says. The decline since October of last year was a much more significant 14.6 percent.
- The nationwide median sale price in October 2023 was $391,800, the highest October median NAR has ever recorded.
- October saw a 3.6-month supply of housing inventory, still below the 5 to 6 months needed for a healthy, balanced market — one that favors neither buyers nor sellers.
- Realtor.com’s October Housing Market Trends Report showed that the number of homes for sale in the country’s 50 largest metro areas was down 2 percent year-over-year, with those markets’ combined inventory down year-over-year for the fourth month in a row.
- A total of 34,472 U.S. homes had foreclosure filings — default notices, scheduled auctions or bank repossessions — in October 2023, according to the latest numbers from ATTOM Data Solutions. That’s up 6 percent from a year earlier. Delaware had the highest foreclosure rate of any state in October, at one foreclosure filing for every 2,432 housing units.
However, housing economists agree that it will not crash: While prices could fall, the decline will not be as severe as the one experienced during the Great Recession. One obvious difference between now and then is that homeowners’ personal balance sheets are much stronger today than they were 15 years ago. The typical homeowner with a mortgage has stellar credit, a ton of home equity and a fixed-rate mortgage locked in at a rate below 5 percent — in fact, according to a recent Redfin study, 82.4 percent of all current homeowners are locked in below the 5 percent mark.
What’s more, builders remember the Great Recession all too well, and they’ve been cautious about their pace of construction. The result is an ongoing shortage of homes for sale. “We simply don’t have enough inventory,” Yun says. “Will some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely.”
Existing home prices
Economists have long predicted that the housing market would eventually cool as home values become a victim of their own success. After posting the a year-over-year decrease in February — the first annual decline in more than a decade — the median sale price of a single-family home is on the rise again, with a 3.4 percent annual gain in October, according to NAR. That represents the fourth month in a row of year-over-year increases.Overall, home prices have risen far more quickly than incomes. That affordability squeeze is exacerbated by the fact that mortgage rates have more than doubled since August 2021.
(to be continued in following post)
Chadstroma
Footballguy
(continued from article)
“We will not have a repeat of the 2008–2012 housing market crash,” Yun said in a September statement. “There are no risky subprime mortgages that could implode, nor the combination of a massive oversupply and overproduction of homes.”
Ken H. Johnson, a housing economist at Florida Atlantic University, says the housing market is being pulled in two competing directions. “I think we are in for a period of relatively flat housing price performance around the country as high mortgage rates put downward pressure on prices, while significant demand from household formation and an inventory shortage place upward pressure,” he says. “These forces, for now, should balance each other out.”
Experts say prices to hold strong
While the housing market is indeed cooling, this slowdown doesn’t look like most real estate downturns. Despite prices being high, the actual volume of home sales has plunged, and inventories of homes for sale have fallen sharply, too. Homeowners who locked in 3 percent mortgage rates a couple years ago are declining to sell — and who can blame them, with recent rates touching 8 percent? — so the supply of homes for sale is even tighter. As a result, the correction will be nothing like the utter collapse of property prices during the Great Recession, when some housing markets experienced a 50 percent cratering of values.“We will not have a repeat of the 2008–2012 housing market crash,” Yun said in a September statement. “There are no risky subprime mortgages that could implode, nor the combination of a massive oversupply and overproduction of homes.”
Ken H. Johnson, a housing economist at Florida Atlantic University, says the housing market is being pulled in two competing directions. “I think we are in for a period of relatively flat housing price performance around the country as high mortgage rates put downward pressure on prices, while significant demand from household formation and an inventory shortage place upward pressure,” he says. “These forces, for now, should balance each other out.”
5 reasons there will be no housing market crash
Housing economists point to five compelling reasons that no crash is imminent.- Inventories are still very low: The National Association of Realtors says there was a 3.6-month supply of homes for sale in October. Back in early 2022, that figure was a tiny 1.7-month supply. This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.
- Builders didn’t build quickly enough to meet demand: Homebuilders pulled way back after the last crash, and they never fully ramped up to pre-2007 levels. Now, there’s no way for them to buy land and win regulatory approvals quickly enough to quench demand. While they are building as much as they can, a repeat of the overbuilding of 15 years ago looks unlikely. “The fundamental reason for the run-up in price is heightened demand and a lack of supply,” said Greg McBride, Bankrate’s chief financial analyst. “As builders bring more available homes to market, more homeowners decide to sell and prospective buyers get priced out of the market, supply and demand can come back into balance. It won’t happen overnight.”
- Demographic trends are creating new buyers: There’s strong demand for homes on many fronts. Many Americans who already owned homes decided during the pandemic that they needed bigger places, especially with the rise of working from home. Millennials are a huge group and in their prime buying years, and Hispanics are a growing demographic also keen on homeownership.
- Lending standards remain strict: In 2007, “liar loans,” in which borrowers didn’t need to document their income, were common. Lenders offered mortgages to just about anyone, regardless of credit history or down payment size. Today, lenders impose tough standards on borrowers — and those who are getting a mortgage overwhelmingly have excellent credit. The median credit score for new mortgage borrowers in the the second quarter of 2023 was a stellar 770, the Federal Reserve Bank of New York says. “If lending standards loosen and we go back to the wild, wild west days of 2004-2006, then that is a whole different animal,” says McBride. “If we start to see prices being bid up by the artificial buying power of loose lending standards, that’s when we worry about a crash.”
- Foreclosure activity is muted: In the years after the housing crash, millions of foreclosures flooded the housing market, depressing prices. That’s not the case now. Most homeowners have a comfortable equity cushion in their homes. Lenders weren’t filing default notices during the height of the pandemic, pushing foreclosures to record lows in 2020. And while there has been an uptick in foreclosures since then, it’s nothing like it was.
Chadstroma
Footballguy
Home prices will fall in 2024: Morgan Stanley.
(HousingWire by Connie Kim). Next year is poised to be better for housing due to lower mortgage rates, higher incomes and an uptick in listings, Morgan Stanley analysts said. Falling rates, more listings and higher incomes will help bring down home prices, analysts say. Let's not sugarcoat it: 2023 was a bad year for the housing market. Mortgage rates eclipsed 8% at one point, inventory hit all-time lows, and home prices continued to climb.
Next year, however, is shaping up to be better, according to Morgan Stanley. Analysts at the firm say that in 2024 the U.S. will avoid a recession, mortgage rates will fall, incomes will continue to rise and an uptick in listings will spur more housing activity. It will even lower home prices.
While the so-called lock-in effect remains a substantial deterrent for an increase in listing volume, a decline in mortgage rates would increase the possibility that a homeowner lists their home for sale, analysts pointed out. While analysts believe that the housing market is unlikely see significant decreases in inventory in 2024, the substantial lock-in effect and the fact the homeowners are [in] strong hands in this cycle should prevent any "material increases" in inventory. In other words, it can't really get worse, but it probably won't get much better. But overall, Morgan Stanley believes the combination of higher incomes, falling house prices and falling mortgage rates will help with housing affordability.
"We think we are poised for an improvement in affordability that we have only seen a handful of times over the past ~35 years," wrote Morgan Stanley analysts. "We expect home prices to fall modestly as housing activity picks up versus 2023, with new home sales outpacing existing sales, but think the strong fundamentals of existing homeowners will prevent" sizable home price corrections.
Morgan Stanley expects stronger housing activity in the second half of the year and new home sales (+7.5%) to increase more than existing home sales (+2.5%) over the course of the full year. As new home sales increase, the report projected a 10% increase in single-unit starts to follow in 2024 to end the year at around 975,000.
(HousingWire by Connie Kim). Next year is poised to be better for housing due to lower mortgage rates, higher incomes and an uptick in listings, Morgan Stanley analysts said. Falling rates, more listings and higher incomes will help bring down home prices, analysts say. Let's not sugarcoat it: 2023 was a bad year for the housing market. Mortgage rates eclipsed 8% at one point, inventory hit all-time lows, and home prices continued to climb.
Next year, however, is shaping up to be better, according to Morgan Stanley. Analysts at the firm say that in 2024 the U.S. will avoid a recession, mortgage rates will fall, incomes will continue to rise and an uptick in listings will spur more housing activity. It will even lower home prices.
While the so-called lock-in effect remains a substantial deterrent for an increase in listing volume, a decline in mortgage rates would increase the possibility that a homeowner lists their home for sale, analysts pointed out. While analysts believe that the housing market is unlikely see significant decreases in inventory in 2024, the substantial lock-in effect and the fact the homeowners are [in] strong hands in this cycle should prevent any "material increases" in inventory. In other words, it can't really get worse, but it probably won't get much better. But overall, Morgan Stanley believes the combination of higher incomes, falling house prices and falling mortgage rates will help with housing affordability.
"We think we are poised for an improvement in affordability that we have only seen a handful of times over the past ~35 years," wrote Morgan Stanley analysts. "We expect home prices to fall modestly as housing activity picks up versus 2023, with new home sales outpacing existing sales, but think the strong fundamentals of existing homeowners will prevent" sizable home price corrections.
Morgan Stanley expects stronger housing activity in the second half of the year and new home sales (+7.5%) to increase more than existing home sales (+2.5%) over the course of the full year. As new home sales increase, the report projected a 10% increase in single-unit starts to follow in 2024 to end the year at around 975,000.
-OZ-
Footballguy
The other factors make sense if they bear out, but how does higher income help lower house prices?
The Z Machine
Footballguy
I don't think it does, but it improves "affordability". Changes the debt to income ratios for buyers, so that helps them qualify for better rates.
STEADYMOBBIN 22
Footballguy
Wut!?!
STEADYMOBBIN 22
Footballguy
Same- almost the exact years and ages.
I was raised by a greatest generation grandparent so maybe that’s why I don’t trust the government or complain about how things are unfair.
STEADYMOBBIN 22
Footballguy
Didn’t they just screw us good credit people recently? Something about not getting loans because we *gasp* worked hard and saved our money?
FreeBaGeL
Footballguy
Ugh. No. This was fake news. Well, misleading news at best. Sorry not frustrated with you here, just how this all went down with the NYP. Basically the New York Post broke the story of a normal every few years change in the LLPA matrix and wrote it in an intentionally very misleading way to make it sound like people with good credit were going to pay more than people with bad credit, and bad credit borrowers were being subsidized by good credit borrowers.
Essentially how it works is there is a decision matrix for fannie/freddie loans that adjusts how much your rate increases over the prime rate based on various factors like credit score and down payment percentage. Generally, the worse your credit and the less money you put down the more of a premium/penalty you pay on your rate. Makes sense.
Coming out of the 2008 crisis this matrix was adjusted to be extremely punitive towards those with bad credit and smaller down payments, and extremely friendly to the opposite. So the gap in rates between someone w/ good credit and someone with bad credit grew extremely large (same with LTV amount, generally). This made sense at the time because one of the big issues with 2008 was people defaulting on the bad loans they were pushed into, so they were trying to discourage people without great credit from borrowing at all until things settled down, but at the same time stimulate buying out of people that had money in order to protect falling home prices.
Every few years since then, the matrix has been re-adjusted to close the gap back towards normalcy. Essentially every few years it gets re-adjusted to make the premium that bad credit and low LTV borrowers are paying on their rate a little less, and vice versa for good credit borrowers.
This happened again in early 2023, as it has multiple times since 2008, including under the previous administration in 2017. But even after the changes good credit borrowers still get way better rates than bad credit borrowers. However the NYP intentionally wrote the article so it would read as if good credit borrowers were paying more than bad credit borrowers. Then people ran with it, almost every site with a certain bend made sure to quote just the right parts of the NYP article so people would scream communism etc, and off the surge of fake news went.
It was intentionally misleading politically motivated fake journalism meant to rile up people that wouldn't actually look at it. And, as usual, it worked.
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STEADYMOBBIN 22
Footballguy
Thanks, I asked because I didn’t know. (It didn’t matter to me at the time because I’m set with my house).
Appreciate the explanation.
Chadstroma
Footballguy
All true except that it really is a subsidy. If it was not then there would be no reason to increase the cost on higher credit scores and lower LTV's as the LLPA. If I remember right, it was even a stated goal in balancing the risk/cost to make it more affordable for the lower credit score borrowers. The cost of which (higher defaults with lower credit scores) is then borne on those with higher credit scores and lower LTV. Another example of that being the case is that there is no reason to have a higher adjustment on a lower LTV for high credit borrowers than a higher LTV unless you are trying to target the 'wealthier' to pay more.
My other disagreement would be that it wasn't just NYP. It was wide spread. It is one of those examples that teaches me to be very skeptical of news sources. Pretty much every time that I would consider myself an expert on the subject matter or have in depth experience/knowledge of something being reported on there is a range of either missing something important to outright being wrong in what is being reported.
Other than that, agree completely.
Chadstroma
Footballguy
I have no idea.... Morgan Stanley seems to be taking happy pills. No recession, incomes rise, lower interest rates, more RE activity, lower home values.... I mean, I am all for it.... that would be a tremendous situation for me personally.... but some of those things are push or pull against the others. If Morgan Stanley is correct, we are about to enter in a new roaring 20's. Do I think they are right? No, they are likely right about one or two things. I just don't see all of that happening.
STEADYMOBBIN 22
Footballguy
I have nothing to back any of this up but to me if feels like we are just resetting our entire economy back 60 years while re regroup and reset our infrastructure and supply lines. Were letting in everyone and increasing our population in order to sustain the next wave of exponential growth.
The times are a changing.
Chadstroma
Footballguy
That would require an actual well thought plan to execute on.... I think you are giving the powers that be too much credit.
Chadstroma
Footballguy
New conforming limits released:
For 1 unit properties
Baseline: $766,550
High Cost Area ceiling: $1,149,825
For 1 unit properties
Baseline: $766,550
High Cost Area ceiling: $1,149,825
Chadstroma
Footballguy
Here's what you can expect from the 2024 housing market.
(HousingWire by Dr. Lisa Sturtevant). There is a lot of uncertainty in the economy and the housing market but there are at least a few things we can count on heading into 2024. Going more in-depth than a Fed meeting, our virtual Housing Market Update event provides you with the strategy-building insights needed to operate in 2024. It's a savagely unhealthy housing market out there, and these economists unpack what that means for you. Register for the virtual event on Dec. 11 here.
In a typical year, there are about 5.2 million sales of existing homes nationally and home prices rise by about 4%. But it's been a long time since we've seen "typical." The number of home sales in 2023 will likely be at its lowest level since 2010, and while sales activity will pick up in 2024, transactions will still be below average.
There is a lot of uncertainty in the economy and the housing market but there are at least a few things we can count on.
Mortgage rates, which reached a more than two-decade high in the fourth quarter of 2023, will begin to come down in 2024, but they are not coming back down to pandemic levels. We are in a new era for mortgage rates where prospective homebuyers should expect rates to settle between 6% and 6.5% next year.
Consumers will reset their expectations, and as rates move lower, there will be both more buyers and more sellers in the market.
Predicting where home prices are going will become a game of "Which came first: the chicken or the egg?" If sellers are enticed into the market before first-time buyers get back in, we could see home prices dip early in 2024. At a national level, if there are price drops, they will be modest and short-lived simply because inventory will still be very low by historic standards. The markets with the greatest risks of price corrections are the country's least affordable, including many major coastal markets.
If buyers come back to the market before sellers, we are in for a competitive market with prices rising. Prospective first-time buyers may continue to sit out the for-sale market in early 2024 as there are more deals in the rental market. Record levels of new apartment construction have led to rent declines and concessions, making it more attractive to rent than to buy in some places.
However, the desire for homeownership is very strong. The underlying demographic fundamentals indicate strong demand and low inventory in 2024 and through the rest of the decade. The oldest millennials are now in their early 40s, but the age of a first-time homebuyer (36) is the highest on record and homeownership rates for this cohort are significantly lower than for prior generations. If millennials were homeowners at the same rate that Gen Xers or young boomers were at the same age, there would be 740,000 more homeowners in the U.S. That is a significant amount of pent-up demand, some of which is waiting for a drop in rates and more inventory in 2024.
While inventory will increase somewhat next year, supply will still be low, largely due to the other big demographic cohort affecting the market - boomers. Boomers are staying in their homes longer. Sub-3% mortgage rates and a lack of homes to downsize into have also contributed to the slower pace of listing activity.
These demographic factors are the primary reason home prices will remain firm and will grow in most markets in 2024.
There are potential wildcards to consider. Another strain of the coronavirus is always a threat lurking off in the corner. Geopolitical risks and economic recession could amplify consumer anxiety and lead to less home buying and selling activity. And while Presidential elections do not tend to have an outsized impact on the housing market in most cycles, it could be a different story this year if there is further deterioration in the political landscape.
(HousingWire by Dr. Lisa Sturtevant). There is a lot of uncertainty in the economy and the housing market but there are at least a few things we can count on heading into 2024. Going more in-depth than a Fed meeting, our virtual Housing Market Update event provides you with the strategy-building insights needed to operate in 2024. It's a savagely unhealthy housing market out there, and these economists unpack what that means for you. Register for the virtual event on Dec. 11 here.
In a typical year, there are about 5.2 million sales of existing homes nationally and home prices rise by about 4%. But it's been a long time since we've seen "typical." The number of home sales in 2023 will likely be at its lowest level since 2010, and while sales activity will pick up in 2024, transactions will still be below average.
There is a lot of uncertainty in the economy and the housing market but there are at least a few things we can count on.
Mortgage rates, which reached a more than two-decade high in the fourth quarter of 2023, will begin to come down in 2024, but they are not coming back down to pandemic levels. We are in a new era for mortgage rates where prospective homebuyers should expect rates to settle between 6% and 6.5% next year.
Consumers will reset their expectations, and as rates move lower, there will be both more buyers and more sellers in the market.
Predicting where home prices are going will become a game of "Which came first: the chicken or the egg?" If sellers are enticed into the market before first-time buyers get back in, we could see home prices dip early in 2024. At a national level, if there are price drops, they will be modest and short-lived simply because inventory will still be very low by historic standards. The markets with the greatest risks of price corrections are the country's least affordable, including many major coastal markets.
If buyers come back to the market before sellers, we are in for a competitive market with prices rising. Prospective first-time buyers may continue to sit out the for-sale market in early 2024 as there are more deals in the rental market. Record levels of new apartment construction have led to rent declines and concessions, making it more attractive to rent than to buy in some places.
However, the desire for homeownership is very strong. The underlying demographic fundamentals indicate strong demand and low inventory in 2024 and through the rest of the decade. The oldest millennials are now in their early 40s, but the age of a first-time homebuyer (36) is the highest on record and homeownership rates for this cohort are significantly lower than for prior generations. If millennials were homeowners at the same rate that Gen Xers or young boomers were at the same age, there would be 740,000 more homeowners in the U.S. That is a significant amount of pent-up demand, some of which is waiting for a drop in rates and more inventory in 2024.
While inventory will increase somewhat next year, supply will still be low, largely due to the other big demographic cohort affecting the market - boomers. Boomers are staying in their homes longer. Sub-3% mortgage rates and a lack of homes to downsize into have also contributed to the slower pace of listing activity.
These demographic factors are the primary reason home prices will remain firm and will grow in most markets in 2024.
There are potential wildcards to consider. Another strain of the coronavirus is always a threat lurking off in the corner. Geopolitical risks and economic recession could amplify consumer anxiety and lead to less home buying and selling activity. And while Presidential elections do not tend to have an outsized impact on the housing market in most cycles, it could be a different story this year if there is further deterioration in the political landscape.
This boggles my mind. The conforming limit was 425ish when we bought our house 6 years ago.
Sand
Footballguy
Please tell me we get flapper girls back...
Chadstroma
Footballguy
That would be the best news possible.
Chadstroma
Footballguy
Falling bond yields help make another Fed rate hike likely next month, but expect a quick pivot to cuts in 2024, S&P Global says
A final interest rate hike from the Federal Reserve is likely next month, as Treasury yields have become less effective in tightening financial conditions, S&P Global Ratings said in a Tuesday forecast.
While cooler inflation sparked bets that monetary policy could soon pivot to cuts, the ratings agency sees a 25-basis-point increase in December instead.
That's as Treasury yields have plunged, after last month's surge pushed long-dated rates above the 5% threshold. Those highs tightened financial conditions, allowing the Fed to keep rates steady at the 5.25%-5.50% range for two consecutive meetings, S&P said.
"Since then, financial conditions have eased somewhat (paradoxically increasing the chances of another rate hike), seemingly because of the following factors," it added.
The first was the Treasury's plan to issue more shorter-duration debt in the coming months, providing relief on 10-year yields. The second was the below-forecast October consumer price report, which prompted markets to rule out further rate hikes and pull forward rates cuts to earlier in 2024.
Meanwhile, expectations of an easing in core inflation pressures are somewhat exaggerated, mandating that the central remains hawkish, according to the note.
But once the Fed hikes, it will pivot quickly in June, when monthly payroll reports will turn negative and inflation gets closer to the target, S&P wrote.
Further cuts will come in the second half of the year, as the policy's impact on the labor market becomes more apparent. The agency expects rates to land at 4.6% and 2.9% by the end of 2024 and 2025, respectively.
"If downside risks to our baseline growth were to materialize, the Fed won't hesitate to cut more. If the economy keeps humming, the restrictive stance could last longer at its peak real rate," S&P said.
In its view, higher costs of capital will erode US hiring, and cause the unemployment rate to rise from 3.9% to 4.6% in 2025. Weaker economic growth will also pressure down labor demand.
S&P's outlook was supported by a speech from Fed Governor Michelle Bowman on Tuesday, who noted that elevated inflation could trigger more rate hikes.
BassNBrew
Footballguy
Boomers came up with cell phones, $8-$10 crafts beer, $15-$25 craft cocktails, steaming services to take the money out of the pockets of younger folks.
Chadstroma
Footballguy
2-year Treasury yield ends with biggest weekly drop since March after remarks by Fed’s Powell
Story by Vivien Lou ChenWhat happened
- The yield on the 2-year Treasury fell 15 basis points to 4.565% from 4.715% on Thursday. That’s the lowest level since June 8, based on 3 p.m. Eastern time figures from Dow Jones Market Data. It ended the week down by 39.2 basis points, the largest weekly decline since March.
- The yield on the 10-year Treasury fell 12.4 basis points to 4.225% from 4.349% Thursday afternoon. Friday’s level is the lowest since Sept. 1. For the week, the 10-year rate fell 25.8 basis points.
- The yield on the 30-year Treasury dropped 9.4 basis points to 4.417% from 4.511% late Thursday. That’s the lowest level since Sept. 20. The 30-year rate slipped 20 basis points this week.
What’s driving markets
Friday’s decline in yields began after a batch of U.S. data was released. The Institute for Supply Management’s manufacturing index for last month was unchanged at 46.7%, remaining at a level that signifies a contraction in activity.The Treasury-market rally which drove yields lower continued even after Fed Chairman Jerome Powell pushed back on expectations for a rate cut next year, by saying officials are prepared to tighten policy further if needed. Traders focused mostly on Powell’s description of current monetary policy as being “well into restrictive territory.”
For all of November, 10- and 30-year yields produced their steepest monthly declines since August 2019, fueled by expectations that easing inflation will prompt the Federal Reserve to back off further rate hikes and possibly cut borrowing costs next year. The 10-year rate fell 52.5 basis points, while its 30-year counterpart declined 51.1 basis points last month.
What strategists are saying
November’s impressive rally in the Treasury market “reflected not only the progress made by the Fed toward re-establishing price stability and rebalancing the labor market, but also an acknowledgment on the part of monetary policy makers that rate hikes for this cycle are most likely over,” said BMO Capital Markets strategists Ian Lyngen and Ben Jeffery, in a note.“Investors have been quick to move on to debate the timing of the first Fed cuts while the Fedspeak has pushed back, instead choosing to message that lowering policy rates won’t be on the agenda for the foreseeable future,” they wrote.
Chadstroma
Footballguy
Who Owns Single Family Rentals?
80% "Mom and Pop Investors" (1-9 units)
14% "Regional Investors" (10-99 units)
3% "Smaller Institutional Investors" (100-999 units)
3% "Institutional Investors" (1000+ units)
80% "Mom and Pop Investors" (1-9 units)
14% "Regional Investors" (10-99 units)
3% "Smaller Institutional Investors" (100-999 units)
3% "Institutional Investors" (1000+ units)
FreeBaGeL
Footballguy
Is that 3% of owners are institutional investors or 3% of units are owned by institutional investors.
Chadstroma
Footballguy
3% of SFR rental properties are owned by "institutional investors" defined as a company that owns more than a thousand units (houses). So, if the entire country had 100 SFR rental properties, then 3 of them would be owned by "institutional investors" or large companies.
dkp993
Footballguy
Yep, it’s the single biggest thing that sucked about buying my home in 2021 when we did. The limit was 560ish then for our area. Which dictated we also do a second when we purchased (HELOC). Got 2.74 on the conforming, HUGE win. But the heloc has over doubled. Ouch. The conforming limits raised just 3 months after we purchased and would have covered both but rates had slightly gone up and we didn't want to lose the 2.7. Had we only know what rates would do we would have happily taken a 2.9 to cover it all.
Chadstroma
Footballguy
Will home prices continue to grow in 2024?
(HousingWire by Mike Simonsen). Mike Simonsen of Altos Research corrects several recent claims about home prices: There are really no national indicators, anywhere in the data, that show home prices currently falling. A few months ago I published a video where we asked, "How much will home prices gain by the end of the year?" Using a headline like that should come with a trigger warning. We could see that home prices were inching up, but there are many who think that home prices are currently falling. Even this week saw a press release with a "home prices in free fall" headline that got picked up all over the media.
Watch the video above to get the latest housing market update from Altos Research. Or, you can check out some key data takeaways from the week ending Dec. 11.
Home prices are flat
The median price of single-family homes in the U.S. is up 2% to 3% over last year at this time. There are a handful of local markets where prices have not found a bottom, but in most of the country home prices actually climbed in the last 12 months. But, 3% home price gains is not that significant. You can kind of think of it as flat. Especially when you factor in inflation.
Median prices down a fraction
The median price of single family homes in the US is $424,900. That's down just a tiny fraction from last week and 2.4% higher than last year at this time. There are two takeaways from the the home prices data:
First, there are really no national indicators, anywhere in the data, that show home prices currently falling. There are none. So if you read a headline that says "home prices are in freefall" you know immediately to discount the clickbait. There are some local markets, for example Austin Texas or condos in San Francisco where the data shows prices falling. But nationally it is not true.
The second takeaway is the lesson I've been sharing lately: Consumers are more sensitive to changes in mortgage rates than to the absolute levels of rates. Last year mortgage interest rates rose by 450 basis points from 3% to 7.5%. That was a huge change in a short period. That's when prices fell. One thing that triggers home prices to resume falling would be a spike in rates. If rates jump over 8% in Q1, that will indeed push prices lower.
Price reductions at normal rates
Normal markets about a third of homes take a price cut. Right now 38.3% of listings have taken a price cut. So that's more than normal. It's a reflection of unaffordability. It's a reflection of very high mortgage rates and how quickly rates rose in September and October.
Inventory is declining for the holidays
There are now 546,000 single-family homes on the market. That's 1.75% fewer than last week. Inventory is finally declining for the holidays. There are 2% more homes on the market now than last year at this time. The last few months as mortgage rates rose, inventory rose too. Rates have stabilized, and inventory if falling into the new year.
We can see that while inventory rises with rates and falls with rates, that there is no signal of any flood of sellers. If we had a flood of sellers, that would be bearish for home prices. Too much supply implies that home prices would drop. A few more listings, a few more sales, this is good for housing. It shows the early stages of thawing from a frigid year. This thawing makes sense too. Consumers are now shopping for homes knowing that mortgage rates are in the 7s. Stability in rates lets people act.
It's no secret that home sales volumes have been in deep recession in 2023 - that's why I called it frigid. 30% fewer home sales this year than in 2022. I've been trying to highlight in the last few weeks how the pace of home sales has stopped declining and is about to show some recovery in 2024. Why we'll have more home sales in 2024 than 2023. This week there were 6.4% more new contracts started than the same week last year. There are still 1.3% fewer contracts pending overall than last year at this time. 279,000 single family homes are in the sales contract pending stage vs, 282,000 last year. These are sales that will close in the near future.
Keep in mind the headlines you hear elsewhere will still report shrinking home sales for a few months of course. Because these will close in the future. We haven't crossed over to growth yet, but the transition appears to be here.
(HousingWire by Mike Simonsen). Mike Simonsen of Altos Research corrects several recent claims about home prices: There are really no national indicators, anywhere in the data, that show home prices currently falling. A few months ago I published a video where we asked, "How much will home prices gain by the end of the year?" Using a headline like that should come with a trigger warning. We could see that home prices were inching up, but there are many who think that home prices are currently falling. Even this week saw a press release with a "home prices in free fall" headline that got picked up all over the media.
Watch the video above to get the latest housing market update from Altos Research. Or, you can check out some key data takeaways from the week ending Dec. 11.
Home prices are flat
The median price of single-family homes in the U.S. is up 2% to 3% over last year at this time. There are a handful of local markets where prices have not found a bottom, but in most of the country home prices actually climbed in the last 12 months. But, 3% home price gains is not that significant. You can kind of think of it as flat. Especially when you factor in inflation.
Median prices down a fraction
The median price of single family homes in the US is $424,900. That's down just a tiny fraction from last week and 2.4% higher than last year at this time. There are two takeaways from the the home prices data:
First, there are really no national indicators, anywhere in the data, that show home prices currently falling. There are none. So if you read a headline that says "home prices are in freefall" you know immediately to discount the clickbait. There are some local markets, for example Austin Texas or condos in San Francisco where the data shows prices falling. But nationally it is not true.
The second takeaway is the lesson I've been sharing lately: Consumers are more sensitive to changes in mortgage rates than to the absolute levels of rates. Last year mortgage interest rates rose by 450 basis points from 3% to 7.5%. That was a huge change in a short period. That's when prices fell. One thing that triggers home prices to resume falling would be a spike in rates. If rates jump over 8% in Q1, that will indeed push prices lower.
Price reductions at normal rates
Normal markets about a third of homes take a price cut. Right now 38.3% of listings have taken a price cut. So that's more than normal. It's a reflection of unaffordability. It's a reflection of very high mortgage rates and how quickly rates rose in September and October.
Inventory is declining for the holidays
There are now 546,000 single-family homes on the market. That's 1.75% fewer than last week. Inventory is finally declining for the holidays. There are 2% more homes on the market now than last year at this time. The last few months as mortgage rates rose, inventory rose too. Rates have stabilized, and inventory if falling into the new year.
We can see that while inventory rises with rates and falls with rates, that there is no signal of any flood of sellers. If we had a flood of sellers, that would be bearish for home prices. Too much supply implies that home prices would drop. A few more listings, a few more sales, this is good for housing. It shows the early stages of thawing from a frigid year. This thawing makes sense too. Consumers are now shopping for homes knowing that mortgage rates are in the 7s. Stability in rates lets people act.
It's no secret that home sales volumes have been in deep recession in 2023 - that's why I called it frigid. 30% fewer home sales this year than in 2022. I've been trying to highlight in the last few weeks how the pace of home sales has stopped declining and is about to show some recovery in 2024. Why we'll have more home sales in 2024 than 2023. This week there were 6.4% more new contracts started than the same week last year. There are still 1.3% fewer contracts pending overall than last year at this time. 279,000 single family homes are in the sales contract pending stage vs, 282,000 last year. These are sales that will close in the near future.
Keep in mind the headlines you hear elsewhere will still report shrinking home sales for a few months of course. Because these will close in the future. We haven't crossed over to growth yet, but the transition appears to be here.
Chadstroma
Footballguy
Recently, rates have gone down significantly. If you know of anyone that you care about that has bought in the last year. Have them reach out to me now to look whether refinancing makes sense for them. I have a lender running a special on IRRRL and FHA/USDA Streamline refi's.
Chadstroma
Footballguy
The 10 year treasury yield dropped like a rock intraday today.
If someone bought this year, specially in the last 6 months, this might be a great window to refi in.
Most professional guesses I have seen saw rates at about what we have now but the end of the year. Do they jump back up? Do they continue to go down? Do they go flat? No idea but for those who swallowed a 7 or 8% rate on a mortgage, they got to be talking to someone (me!) to look at their options today for sure.
DA RAIDERS
Footballguy
Chad is legit people. He will tell you to go with someone else if they have a better price. I experienced that first hand.
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