The Unseen Success of Community Banks | 1-Minute Market Update w/ Martin

Ever wondered why home searches are decreasing even as mortgage rates hit their lowest since early 2023? Join us this week as we unravel this market paradox, where mortgage rates are down to 6.25% but home buying interest seems to defy gravity. You'll gain insights into why the median home price has climbed 4% from last year, yet Google searches for homes are on the decline. We'll discuss how these unusual trends leave both buyers and sellers in a whirlwind of new norms and what it means for anyone considering entering the market.

But that's not all—we also spotlight the unsung heroes of the financial world: community banks. Against the backdrop of commercial real estate loan concerns, an impressive 93% of these local institutions are turning profits, demonstrating their resilience and keen understanding of local markets. Despite the slight dip in bond prices, fewer borrowers are falling behind on payments. Tune in to learn how these community banks are weathering the storm with aplomb, offering a beacon of hope for both the real estate sector and local financial institutions.

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Transcript

Speaker 1: 0:29

This week, local banks defying the odds, despite commercial real estate rate. But before that, let's take a look at this week's housing market data Today's October 4th 2024, and this is your weekly real estate market update. First things first, mortgage rates. Remember those sky-high numbers a few months back? Well, they've come down a bit. It's like your favorite coffee shop finally lowered the price on your latte. In fact, daily average 30-year fixed rates are currently at 6.25%, which is the lowest they've been since February of 2023. And the weekly average is even lower at 6.08%, and that's the lowest in two years.

Speaker 1: 1:12

Despite this decline, mortgage purchase applications have increased slightly, up 1% from the week earlier. It seems more people are interested in buying homes, but it's still not as crazy as it was a while back. Think of it like when your friend starts a new diet and everyone else follows suit. Overall, people are still interested in buying homes, but maybe not as much as before. It's like when your favorite show gets canceled but you still watch the reruns. The Redfin Homebuyer Demand Index is up 2% from the start of the year. However, people are searching for homes for sale a little less, indicating a slight decrease in interest. Imagine it like when your favorite band announces a new album and everyone immediately starts streaming their old stuff. Google searches for homes for sale are down 6% from a month earlier. What's interesting about this is that, despite the fact that interest rates have gone down, google search home for sale is down by 6% from a month earlier. That's really, really interesting, according to Redfin. I find that data really interesting and this is why sometimes, when you look at fundamentals, the fundamentals may be the fundamentals, but oftentimes the market dictates the way the market is going to run right.

Speaker 1: 2:27

We looked at what happened with when mortgage rates started going up, we thought inventory. You know I was in this group thinking, hey, inventory has got to go up because this can slow down affordability. While inventory went up a little bit, it didn't go up that much. I think it was what 15% not enough to make a big dent into in the market. We still have a shortage of inventory. So, yeah, it's just the market isn't going to do what the market is going to do. So we're constantly learning and evolving and all we can do is adjust to the market.

Speaker 1: 2:53

Now let's talk prices. The median sales price for homes in the past month was $383,375, which is up 4% from last year. That means homes are selling for more than they were a year ago, but the median asking price is even higher at $401,700, up 5.3%. So sellers are asking for more than ever before, but it seems buyers are still willing to pay it. For mortgage payments, the good news is that they've gone down a bit. The median monthly mortgage payment now is $25.29, which is a 5.9% decrease from last year. That's because interest rates obviously have come down, but remember, this is still a pretty big chunk of change to put towards a home.

Speaker 1: 3:42

So what's going on in the market itself? Well, it's still a seller's market, but things are starting to balance out a bit. The share of loans that are sold above the asking price has gone down from $1.5 billion to $1.5 billion, 31% to 26.7%. That means buyers have a bit more of negotiation power. I can speak for that myself, as I have a few properties on the market now.

Speaker 1: 4:05

I see that and happening with the community banks these days. What's happening with community banks these days is they're doing surprisingly well, even though they lend a lot of money to businesses that own buildings, in other words, commercial real estate, or CRE. Regulators were a bit worried, but so far, so good. Here's the lowdown. 93% of community banks are making a profit. That's a pretty big deal. Loans are performing well, even with rising interest rates. Fewer borrowers are behind on payments compared to before the pandemic. Good news they know their local markets like the back of their hand. This helps them understand businesses and work with them through tough times.

Speaker 1: 4:44

So thumbs up for the local community banks. But there's a small one. Bond prices are down a bit. This means some banks have unrealized losses and on investments they made when interest rates were really low Not ideal, but it's getting better. Overall, community banks were a crucial part of the financial system and they are holding up strong. So I'm happy that community banks are doing good, because I totally agree with this, that community banks are kind of the lifeblood of the local communities. I just recently refinanced one of my buildings with a community bank and they're just awesome. I have a strong relationship with this particular community bank and I want to see community banks continue to thrive because they're good for business. So if you're interested in starting your journey to financial freedom through real estate investing, check out wwwmartinreimasterycom and let's jumpstart to your real estate investing journey and that's a wrap in this week's Weekly Real Estate Market Update. I'll see you guys next week. Peace out.