The RE Reality Zone is a weekly 3-minute read that cuts through real estate noise and gives you the data that matters to make money - no hype, just the critical information to make good real estate investment decisions.

30-Second Summary

Mortgage Interest rates are flat this week, remaining in the mid-6% range.

A few more sellers than this time last year, active listing inventory crept up a bit, but buying activity is also increasing for Spring so we’ll see where it ends up.

Seasonally, the national supply of single-family houses (inventory) will increase as we enter the Spring. Inventory has remained flat for the last couple of weeks.  Seller supply remains constricted. The national inventory remains 25% below 2020 levels. Some parts of the country are back to “normal,” and others are not. Condos are also a problem in Florida. Most of the condos for sale in the US are in Florida. Prices are getting softer.

The number of owners with a mortgage over 6% has increased to 17%, the highest since 2016. The big stat for you is that house payments are 115% higher than 2020.  

Mortgage delinquency rates are 3.72%, less than the 4.5% pre-pandemic level.

Foreclosure starts are 5.4% lower than pre-pandemic levels.  Foreclosures are 34% less than pre-pandemic levels. This is because people don’t want to lose their low loan payments. Renting/buying somewhere would be hundreds of dollars more per month.

Nothing shows an imminent price crash unless the greater economy tanks. That is unlikely. The real problem is that people with median incomes can't afford a median-priced house. That is a significant problem that can only be fixed with wages catching up to cost.

We need more houses. If the illegal immigration situation changes, that may affect housing. No one knows by how much.

Make your purchase and sale decisions based on the fact that the sales pace is increasing now.

Key Stats

(from our friends at Altos, Housingwire, Jason Hartman, Joe Manausa, and others)

Last week’s SFH Inventory on Market: 639,000 (altos)
This week’s SFH Inventory on Market: $656,000 (29% higher than same week last year)

Listing volume – 68,000 new listings (14% higher than same week last year)

Sales volume – 66,000 new contracts (3% lower than same week last year)

This week’s TOTAL SFH in Contract status: no weekly data

This week’s price reductions are Higher than last year at 34% (normal is 30-35%).
(A leading indicator of buyer demand strength, and home price direction)

Last week’s on-market SFH Median Home Price: $435,900
This Week’s on-market SFH Median Home Price: no weekly data

Last week’s Median Price of Homes in Contracts: $389,900
This Week’s Median Price of Homes in Contracts: $390,000 (unchanged vs. than same week last year)

Last week’s Median Price of New Listings: $435,000
This Week’s Median Price of New Listings: $439,000 (1% higher than same week last year)

Housing Vacancy Rate: 6.9% – very low (quarterly)

National vacancy rates in the fourth quarter 2024 were 6.9 percent for rental housing and 1.1 percent for homeowner housing. The rental vacancy rate remained the same as in the third quarter of 2024 (6.9 percent) and was slightly higher than in the fourth quarter of 2023 (6.6 percent)

Policy Watch

Big picture items that may affect Real Estate:

• I hope to provide you with the commonly referenced, applicable financial data to see for yourself what effect government economic policy has on jobs, incomes, debt positions, and affordability for Americans, regardless of party. Gas price down, egg price down, rates down, wages up, cutting gov waste. It’s a start.

• The temporary Tariff effect will play out over a couple of months until the posturing stops. I think we all understand that tariffs are not usually intended to be permanent, they simply bring countries back to the negotiation table for fair trade agreements. Our recent trade agreements with China, Mexico, and Canada have not been fair or to America’s mutual benefit. They need us more than we need them, so it will turn out fine in the end.
  

• The US owes 36 Trillion dollars in national debt, please hold our leaders accountable to reduce that number and be fiscally responsible. Yes, it means tough discussions on what should be cut. This high debt means interest rates have to be higher to sell the treasuries to other countries.

• The BRICS nations are going to have a hard time coming off the Dollar as the U.S. actions being taken to curb spending kick in to increase stability. Plus the tariff threat of course.

• *** The jobs report is important. Please know when the gov puts out a report like "jobs", there is a revision done a month or so later, sometimes later, when they crunch the actual numbers. The press rarely reports the revisions, but that is the most accurate. I advise you to ignore the initial reports and ONLY look at the later revised reports for a more accurate view. They indicate part-time, full-time, or foreign-born jobs, those are categories that matter. Dec jobs increase was fantastic, but let’s hold applause until we see what the revision later is.

• As a side note, it’s interesting to see how many gov agencies have claimed their “independence” from Executive Branch authority even though they are executive branch offices. If the elected President can’t fire people or agencies in the executive branch, then how are those heads subject to the will of the people versus being entrenched bureaucrats without accountability? Food for thought.

• Please say NO to Central Bank Digital Currency (CBDC) in any form (i.e., Fedcoin).

• Passive income from RE is a shield for most of this, whereas "flipping" and wholesaling can stop at any time. **** We love “co-living” for amazing cash flow. Ask us about how we can help you retire with just 5 single-family houses.

Mortgage Applications & Rates

Why it matters: The current market relies HEAVILY on the CHANGE in mortgage rates.

The average rate on a 30-year fixed mortgage backed by Freddie Mac rebounded to 6.65% on March 13, breaking a seven-week streak of easing and rising from the lowest levels seen since early December. “Despite volatility in the markets, the 30-year fixed-rate mortgage remained essentially flat from last week. Mortgage rates continue to be relatively low versus the last few months, and homebuyers have responded.... source: Trading Economics

Mortgage applications in the US fell by 6.2% in the second week of March, trimming the cumulative 37% surge from the two previous weeks, according to the latest data from the Mortgage Bankers Association.…... source: Trading Economics

Delinquency & Foreclosures

(Monthly as of January 2025)

Why it matters: Delinquency is the leading indicator of borrower stress. (It will lag behind a few weeks before the data is reported)

ICE First Look at Mortgage Performance: Foreclosure Starts Jump as VA Moratorium Ends; Wildfire Delinquencies Emerge

• Delinquencies fell 24 basis points (bps) to 3.47% in January; that’s 10 bps higher than last year but 33 bps below pre-pandemic levels

• Foreclosure starts jumped by 30% and sales rose by 25% in January – driven by an expiration in the VA foreclosure moratorium – with active inventory rising by 7% in the month

• While the number of borrowers past due as a result of last year’s hurricanes has fallen from 58K to 41K in recent months, the financial impact from the recent Los Angeles wildfires is emerging

• An estimated 680 homeowners in the path of the Los Angeles wildfires missed their January mortgage payment, and ICE daily mortgage performance data through Feb. 17 suggests as many as 3,300 borrowers may be at risk of missing their February payment

• Prepayment activity (SMM) fell to 0.48% in January, its lowest level in nearly a year, driven by the combination of modestly higher rates and the typical seasonal slowdown in home sale activity

https://mortgagetech.ice.com/resources/data-reports/first-look-at-january-2025-mortgage-data

Find additional supporting data on our website

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Corey & Team
Fidelis Wealth Builders

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