Facing the Storm: Rising Mortgage Rates and a Cooling Housing Market | 1-Minute Market Update w/ Martin Perdomo

Are you ready to face the storm? The housing market is changing, and we're here to help you navigate the turbulence. This week, we examine the surprising fact that despite no interest rate hike, mortgage rates have hit a record high. We dissect the latest data revealing a slight increase in mortgage purchase applications week on week but a significant decrease from last year, signaling a softening market. We also delve into Google home searches, which are down, while median home prices continue to rise.

Join us as we analyze the impact of rising interest rates and prices and declining home searches on the housing market. We discuss how the median asking price for newly listed homes has seen the biggest increase in nearly a year and what this could mean for the future. We also talk about the Federal Reserve's decision to hold interest rates steady, hinting at one more rate hike before the year ends, and its potential effect on the 30-year mortgage and the overall real estate market. We predict that a squeeze is inevitable. Stay tuned to our weekly real estate market update to stay informed, prepared, and ready for what lies ahead.

Transcript

Speaker 0: 0:00

No interest rate hike this week, but the mortgage rate has reached a record high. Find out more in this week's RiddiceDate Market Update. But before that there's this week's housing market data that we need to cover. Mortgage purchase applications are up 2% from a week earlier and down 26% from a year earlier. Guys, we are in a really soft market right now. This is the eye of the storm.

Speaker 0: 0:27

No searches for homes for sale is down 13% from a month earlier. 13% from a month earlier, man, and down 14% from a year earlier 14% from last year. Medium home sales prices was $374,975, up 3.4% from a year earlier the smallest increase in a month. Medium sales 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 $386,589, up 4.5% from a year earlier. That's the biggest increase in nearly one year. This is crazy. Interest rates are going up, prices are going up, but we're starting to see some major cracks in the foundation with home searches. Google Home searches for sale are down. Mortgage purchase applications are down 26% from a year earlier. So we're starting to see some major cracks in the foundation in this market. The market is softening the monthly mortgage payment on a median asking price was $2,661, at a 7.9 mortgage interest rate and all time high. That is crazy, insane, with these interest rates and these prices not caving in yet and I say that very, very specific. That they will cave in these interest rates will force the market to soften even further.

Speaker 0: 1:56

Pending home sales were down 12.7% year over year. New listings of homes for sale fell 6.7% year over year, the smallest decline in over a year, but that's partly because new listings fell rapidly at this time last year, in 2022. New listings dropped 16.2% from a year earlier and 38% of homes that went under contract had an accepted offer within the first two weeks on the market. Now, this is very interesting data here, because we have properties on the market and what I can tell you about certain areas, certain regions in the market, is yes, 38% agree with this, 38% is going on the contract within the first two weeks, but at what price point? The high end price points are not going on the contract. In two weeks, homes that sold were on the market for a median of 30 days, remaining unchanged from last week, and 32.8% of homes that sold above their final list price also remained unchanged from last week.

Speaker 0: 2:56

And, lastly, the Federal Reserve held interest rates steady in a decision released Wednesday, while also indicating it still expects one more rate hike before the end of the year and fewer cuts than previously indicated next year. As I record this today, the 22nd of September, the Federal interest rate is through the roof. We got the 10 year Treasury at a almost 4.5% the 10 year Treasury, which is insane. This is what has a direct impact on the 30 year mortgage. So if we saw the 30 year mortgage at a 7.9% and average of 7.9% last week, wait until you see what happens over the next week with the 10 year treasury at 4.5.

Speaker 0: 3:39

This is really going to squeeze the market. That final increase, if realized, will do it for this cycle, said DeFed Chairman, jerome Powell. According to projections the central bank released at the end of this two day meeting, if DeFed goes ahead with the move with this one more increase, it would make a full dozen hike since the policy tightening began in March of 2022. Along with the rate projections, defed also sharply revised his economic growth expectation for this year. With growth domestic product the GDP now expected to ride 2.1% this year. In addition to holding rates at a relatively high level, defed's are continuing to reduce his bond holding, so they're tightening even more, guys.

Speaker 0: 4:22

These feds is tightening right A process that has cut the central bank balance sheet by some 815 billion since June of 2022. That's almost 1 trillion dollars, guys. That's going to have an impact. It just doesn't happen overnight. This is going to squeeze the real estate market and when you take this along with everything else that's happening, with strikes happening, you start combining all of these things we have a problem. The interest rates again, as I record this, the 10 year treasury today is 4.49%, so almost 4.5%. I've never seen the 10 year treasury this high. So expect these mortgage rates to be through the roof here as we unravel, and expect this to have a major impact on the market this winter. We will see. I think we're going to see some deals coming on the market here for single family residents at these rates. We're going to have a problem. And this has been your weekly real estate market update. I'll see you, guys next week.