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 profit opportunities.

30-Second Summary

Mortgage Interest rates rose a bit this week.  Sales are higher this week than last year.

With an expectation to return to the booming economy levels of 2016-2020, optimism is higher, but affordability remains an issue.

Seasonally, the national supply of single-family houses (inventory) is LOWER and will decline for the remainder of the year (total inventory is still 23% below the pre-pandemic level in 30 states).

New listing volume is a tad higher but continues to show low motivation for sellers to sell.  The lack of sellers has been coined “the Great Stay”.  Low inventory and low Sellers have kept home prices about 5% higher compared to this point in 2023 (nationally). 

Interestingly, the country has a different real estate market in half the country. Half is a higher inventory and is softer than the other half. The Reality Zone shows those differences.

Mortgage delinquency rates are 3.48%, which is less than the 4.5% normal pre-pandemic level.
Foreclosure starts are 5.4% lower than pre-pandemic levels.  Foreclosures are 34% less than pre-pandemic levels.

However, there have been 4 consecutive months of increasing serious delinquency 90+ days. It's pressure but not a crisis. Prepayment activity is also up 40%, that's amazingly good.
There is no foreclosure crisis.

Nothing shows a crash in price imminent unless the greater economy tanks.  The REAL problem is the median income can't buy a median-priced house. That is a significant problem.

We need more houses.

Make your purchase and sale decisions based on the fact that the sales pace gets slower in most areas this 2nd half of the year. If you have houses on the market, price to sell now.

Key Stats

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

Last week’s SFH Inventory on Market: 690,015 (altos)
This week’s SFH Inventory on Market: 682,150 (26.6% higher than same week last year)

Listing volume – 45,000 new listings (14% higher than same week last year)

Sales volume – 50,000 new contracts (3% higher than same week last year)

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

This week’s price reductions are Lower at 38.2% = High (normal is 30-35%).
(A leading indicator of buyer demand strength, and home price direction)

Last week’s on-market SFH Median Home Price: no data
This Week’s on-market SFH Median Home Price: no data

Last week’s Median Price of Homes in Contracts: $384,900
This Week’s Median Price of Homes in Contracts: $383,700 (5% higher than same week last year)

Last week’s Median Price of New Listings: $375,000
This Week’s Median Price of New Listings: no data

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

National vacancy rates in the third quarter of 2024 were 6.9 percent for rental housing and 1 percent for homeowner housing. The rental vacancy rate was slightly higher than the rate in the second quarter of 2024 (6.6 percent) and than the rate in the third quarter of 2024 (6.6 percent).

Policy Watch

Big picture items that may affect Real Estate:

• Look for economic changes to increase national revenue, like energy sales. Hard to say what the effects will be on mortgage interest rates.
  

• 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.

• Are the BRICS nations going to get off the Dollar and go to gold or a digital currency? It seems like those countries would not be able to organize themselves enough to do it, but they are trying hard to unseat the dollar. Firm but fair financial system management is critical.

• 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 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. Let’s see if we can recover jobs next year.

• In my view, everything is about to get better with a reduction in Federal involvement in everything, delineated to the states, and a reduction in Fed spending.

• 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.

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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 increased to 6.72% as of December 19th, 2024, rebounding from the lowest level since mid-October of 6.6% after three consecutive weekly declines. The rise aligned with soaring US Treasury yields, as the Federal Reserve's hawkish outlook, including fewer rate cuts in 2025, strong economic data, and concerns about persistent inflation, limited the urgency for looser monetary policy..…. source: Trading Economics

Mortgage applications in the US eased by 0.7% from the previous week in the period ending December 13th, trimming the 5.4% surge in the previous week, according to data compiled by the Mortgage Bankers Association. It was the first drop in mortgage demand in five weeks, aligned with a rise in benchmark interest rates as expectations of fewer rate cuts by the Federal Reserve next year lifted yields in longer-term fixed-income instruments..…. source: Trading Economics

Delinquency & Foreclosures

(Monthly as of October 2024)

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: Serious delinquencies hit 17-month high while foreclosure activity remains historically muted

• At 3.45% in October, the national delinquency rate was up 6% from the same time last year, marking five consecutive months of year-over-year increases
  

• While 30- & 60-day delinquencies decreased from September, seriously past-due loans (90+ days) continued their slow rise, now up 7.3% from last year and at the highest level since May 2023
  

• Though both foreclosure starts (+12.2%) and completions (+10.1%) were up in October, both remain down from last year (-12.3% and -9.5%, respectively) and well below pre-pandemic levels
  

• Likewise, the foreclosure inventory was up a modest +1K in the month, but there are 28K fewer loans in active foreclosure than there were at this same time last year
  

• Prepayment activity rose on easing interest rates to a level not seen in over two years (May 2022) and nearly double where it was last October

https://www.icemortgagetechnology.com/resources/data-reports/first-look-at-october-2024-mortgage-data

Find additional supporting data on our website

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Corey & Team
Fidelis Wealth Builders

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