Wealthy AF Podcast

Price Surges, Policy Changes, and Wise Investments | 1-Minute Market Update w/ Martin Perdomo

September 15, 2023 Martin Perdomo "The Elite Strategist" Season 2 Episode 286
Price Surges, Policy Changes, and Wise Investments | 1-Minute Market Update w/ Martin Perdomo
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Wealthy AF Podcast
Price Surges, Policy Changes, and Wise Investments | 1-Minute Market Update w/ Martin Perdomo
Sep 15, 2023 Season 2 Episode 286
Martin Perdomo "The Elite Strategist"

Ready to navigate the stormy seas of today's real estate market? Strap in as we dive headfirst into the heart of the issue, dissecting current challenges and revealing startling truths about the sharp rise in home prices and interest rates. With a surprising 3.9% surge in median home sales price, and an 11.8% year-over-year drop in pending home sales, the dream of home ownership has become a nightmare for many. We tear apart the chaotic conundrum homeowners currently face; sell at a potentially lower rate or brace for an increase in mortgage rates?

Our journey doesn't stop at just data. We explore the profound impact of return-to-office mandates on the housing market, digging into the reasons why one in every ten U.S. home sellers is packing up and moving due to these policies. From concerns over safety and crime, to fears of discrimination and the looming threat of climate change, we pull back the curtain on the realities influencing this mass exodus. Finally, we put our heads together to offer sage advice to listeners on how to invest wisely in real estate, ensuring the numbers align with their unique circumstances. It's a wild rollercoaster ride through the real estate landscape, and it's one you won't want to miss.

This episode is brought to you by Premier Ridge Capital.

Sign Up for our Newsletter and get our FREE E-Book where you'll learn everything you need to know about creating financial freedom through multifamily syndication.

Visit www.premierridgecapital.com now!

This episode is brought to you by Premier Ridge Capital.
Build Generational Wealth As A Passive Investor In Multifamily Real Estate Syndication!
Visit www.premierridgecapital.com to find out more.

Support the Show.

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Show Notes Transcript

Ready to navigate the stormy seas of today's real estate market? Strap in as we dive headfirst into the heart of the issue, dissecting current challenges and revealing startling truths about the sharp rise in home prices and interest rates. With a surprising 3.9% surge in median home sales price, and an 11.8% year-over-year drop in pending home sales, the dream of home ownership has become a nightmare for many. We tear apart the chaotic conundrum homeowners currently face; sell at a potentially lower rate or brace for an increase in mortgage rates?

Our journey doesn't stop at just data. We explore the profound impact of return-to-office mandates on the housing market, digging into the reasons why one in every ten U.S. home sellers is packing up and moving due to these policies. From concerns over safety and crime, to fears of discrimination and the looming threat of climate change, we pull back the curtain on the realities influencing this mass exodus. Finally, we put our heads together to offer sage advice to listeners on how to invest wisely in real estate, ensuring the numbers align with their unique circumstances. It's a wild rollercoaster ride through the real estate landscape, and it's one you won't want to miss.

This episode is brought to you by Premier Ridge Capital.

Sign Up for our Newsletter and get our FREE E-Book where you'll learn everything you need to know about creating financial freedom through multifamily syndication.

Visit www.premierridgecapital.com now!

This episode is brought to you by Premier Ridge Capital.
Build Generational Wealth As A Passive Investor In Multifamily Real Estate Syndication!
Visit www.premierridgecapital.com to find out more.

Support the Show.

Speaker 0:

Return to office mandates are forcing some people to choose between selling their home at a loss or losing their job. Find out more in this week's weekly real estate market update. But before that, let's get right into this week's housing data. Mortgage purchase applications were up 1% from a month earlier, seasonally adjusted, while purchase applications were down 27% from a year earlier. Google searches for homes for sale remained unchanged, but down 7% from a year earlier. So what's interesting about this data here is that Google searches homes for sales were already down and we're 7% down from that.

Speaker 0:

Medium home sales price was $376,250, up 3.9% from a year earlier, which is insane, as prices are up nationwide now and interest rates are up. We're going to get to that in a minute. So what does that cost? A recipe for disaster. The median asking price for a newly listed home was $384,475, up 4.3% from a year earlier. That's the biggest increase since November 2022. The monthly mortgage payments on a medium asking price was $2,632 at a 7.12% mortgage rate. So this I'm going to talk about this here for a minute because while this interest rate may not be a high interest rate from historical interest rates, but what is high is we're at record high home sales prices. So when you take this interest rates at the home record sales prices of houses, that creates a recipe for unaffordability in the United States of America for housing. That's what's going on.

Speaker 0:

The biggest threat, in my opinion, with the market today is the affordability issue that the working class American can no longer afford to buy these types of homes at these prices. With these interest rates. They can afford it. They just can't do it with these interest rates because their paychecks are not going up as fast as interest rates are going up. Someone please call Jerome Powell. Someone please let these guys know. Someone please let Janet Yellen know that this is what's happening and this will hurt the American people. It will hurt the real estate market. Intentionally. That's what they were trying to do is slow down the real estate market by these moves, and we are seeing it. Pending home sales were down 11.8% year over year, continuing a 15 month plus streak of double digit declines. New listings of homes for sale fell 7.1% year over year, the smallest decline in over a year, but that's partly because new listings fell rapidly at this time in 2022. So what I said earlier about Google, this just confirms that I mean 2022. We were seeing prices going down and we started seeing declines in Listings and things like that. Active listings dropped 17% from a year earlier, the biggest drop since February of 2022. Again, guys, crazy, right, crazy. Because people are not putting houses on the market, so active listings dropped 17% from a year earlier.

Speaker 0:

Why would I put my house, or why would a working-class family, a regular working-class family, put their house on the market and get out of there? 3%, 3.5, 4% interest rate 30 year fixed mortgage to go into a 7% interest rate mortgage? It doesn't make sense. So this is creating a real crap show in the industry right now. This, this is gonna be interesting. How we're gonna be talking about this time in 3, 4, 5 or even 10 years from now. How we'll look back and we'll even look back at this podcast and think, man, we didn't know that this was gonna turn out this way and look at the way things turned out and look how, how we were while we were in the mix. Had I known that, right, had I known that, I would have done things differently.

Speaker 0:

I'm gonna share a little nugget of wisdom with you about real estate, as I, before I even go on, is. Real estate historically is very forgiven. I was on the phone with the underwriter were friends. I was thanking him because he was pretty tough on me during the underwriting process and I said to him Lending is crazy right now, man, and his exact words were it is for now, martin, but it won't always be this way. We all know this.

Speaker 0:

So don't wait to buy real estate. Buy real estate and wait. Just make sure your numbers make sense. Whether you're a homeowner, whether you're buying to live in a property or you're buying a property to invest, just make sure the numbers make sense. Okay, thirty eight point two percent of homes that went under contract had an accepted offer Within the first two weeks on the market, which is that's not my experience here in the Poconos. Homes that sold were on the market for a median of 30 days. 32.8 percent of homes sold above their final list price.

Speaker 0:

And also Redfin reported the return to work policies are motivating One of every ten US Home Seller to relocate. This is according to the Redfin Commission survey conducted by Qualtrics in May and June of 2023. The survey was filed to 5079 US residents. This report focused on 616 respondents who indicated that they're likely to sell a home and move in the next year Roughly 20% of those who were surveyed, sellers say they were moving due to safety, crime concerns and decided to live somewhere more Align with their social views and lower taxes. About 10% of respondents cite discrimination in their neighborhood and or worries about climate change as reasons for their move.

Speaker 0:

The desire of more space is the most common Fact. They're driving people to relocate, with one third 33%. So here's the thing. This is a great article, awesome article. I don't think it's enough data. 616 respondents is not enough data. So to take this really too hard and for this to really work, people are saying you know Some of these respondents. Some of what this article says is people are moving because of crime Well, intelligent homeowners by homes in good school districts with low crime rate. So I mean not enough data. So, and this has been your weekly real estate market update. I'll see you guys next week. Peace out.