Wealthy AF Podcast

Shakeup in Real Estate: A Comprehensive Analysis | 1-Minute Market Update w/ Martin Perdomo

November 17, 2023 Martin Perdomo "The Elite Strategist" Season 2 Episode 328
Wealthy AF Podcast
Shakeup in Real Estate: A Comprehensive Analysis | 1-Minute Market Update w/ Martin Perdomo
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Show Notes Transcript

Ready to crack the code on this unpredictable housing market? We're unraveling the latest trends and statistics that are shaping the current property landscape. Prepare yourself for a deep exploration of the market conditions, as we tackle the hard-hitting issues of homebuilder sentiment, high mortgage rates, and the impact of a lack of resale inventory. 

This conversation comes loaded with invaluable insights. We uncover the truth about housing affordability, disclosing that the average American household income needs to be $114,000 a year to qualify for the median asking price. We also offer our projections for the market's future, examining the outlook for single-family starts in 2024 and the potential for interest rate drops. Join us for a closer look at pending home sales, new listings, active listings, and the percentage of homes that had an accepted offer within the first two weeks on the market. Discover why something in the housing market is bound to break and why this could be the biggest shakeup in real estate history. You won't want to miss this!

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Speaker 1:

Homebuilder sentiment drops to the lowest point in a year. But falling rates for some optimism in this week's weekly real estate market update. High mortgage rates continue to weigh on the nation's homebuilders, leading to an increase in price cuts to lure buyers. But builders are optimistic about the recent signs that interest rates may move lower soon. Homebuilder sentiment fell 6.34 in November. On the National Association of Homebuilders Wells Fargo Housing Market Index, the HMI, anything below 50 is considered negative. Analysts had expected that number to come in unchanged from October and I quote the rise in interest rates since the end of August has dampened builders' views of market conditions, as a large number of prospective buyers were priced out of the week. Nhb Chair Alicia Hooli said in the release. Moreover, highest short-term interest rates have increased the cost of financing for homebuilders and land developers, adding another headwind for housing supply in the market. Low on resale inventory. This marks the fourth straight month of declines. Sentiment is down 22 points since July and is now at the lowest level since the end of last year. The builders did note that nearly all of the monthly data for November was collected before the monthly consumer price index released earlier this week, which showed inflation moderating. Nhb forecasted a roughly 5% increase for single family starts in 2024 as financial conditions ease, with improving inflation data in the months ahead, according to the release. Okay, so here's my thoughts on this situation here. Builders certainly are going to see building prices come down. We're already seeing reduction in prices and builders I know I'm watching the Florida market very particularly we're seeing builders bring down the pricing of housing significantly. We're also expecting I am expecting, my forecast is I'm expecting the market to get even harder next year before it gets easier. I think once we get past next year and we get past the election, we're going to see a leveling off on the market. I think that interest rates are going to level off here. Where we are, I don't think we're going to see any more increase in interest rates, but I do expect that we will see some hardship, especially in the commercial side of real estate, which, by the way, all of this stuff is together. There's no such thing as one side suffering and not the other side. The banks are the banks. It's all the same money. It's all the same investors lending the same money. No-transcript, be ready for that. Okay, let's get right into the latest insights and trends shaping the housing market's current state Mortgage purchase applications are up 3% from a week earlier and down 12% from the year earlier. Google searches for homes for sale are unchanged from a month earlier and down 10% from a year earlier. Medium home sales price was $367,988, up 4.2% from a year earlier the biggest increase in a year. Prices are up partly because elevated mortgage rates were hampering prices during this time last year. The median asking price of newly listed homes was $378,549, up 5.6% from a year earlier, the biggest increase in over a year. The monthly mortgage payment on the median asking price was $2,670 at a 7.5% mortgage rate, down $70 from the all-time high set three weeks earlier. Man, that is rough for Americans. With these interest rates we have hit. We have a major issue with affordability, and housing affordability is just out of the window right now. Did you guys know that the average American who qualifies for the median asking price in America at these rates, the average household income has to be $114,000 a year just to qualify? This is why we're seeing these issues. This is a problem. This is a big, big problem and I don't know what something's gonna break in the housing market. Something is gonna break and I think that either rates are gonna have to come back down or prices are gonna have to come back down. Something is fundamentally guys. Something is gonna break. It just doesn't make sense. Pending home sales were down 8% year over year. New listings of homes for sale are up 3.3% year over year Second year over year increase since July 2022. This increases partly because of new listings were falling at this time last year. Active listings dropped 8.7% from a year earlier, the smallest decline since July, at the highest level since the start of 2023. 35.8% of homes that went on the contract had an accepted offer within the first two weeks on the market. Homes that sold were on the market for a median of 34 days and 26% of homes that sold above their final list price. And this has been your weekly real estate market update. I'll see you guys next week. Peace out.