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 jumped a bit, remaining in the middle-6% range.

Still more sellers than this time last year, active listing inventory crept up, as it does every Spring, but buying activity is also increasing for Spring, higher than this time last year.

Seller supply is slowly creeping back to pre-pandemic levels. The national inventory remains 20% below 2020 levels. Some parts of the country are back to “normal,” and others are still low in inventory of housing.

Mortgage applications are much higher this year than last year, signaling an easing of the recency bias of the low rates from the pandemic. The more buyers understand the rates aren’t going back, the more they will buy. There is pent up demand.

37 of 50 Major Markets have higher-priced houses than last year.

The number of owners with a mortgage over 6% has increased to 17%, the highest since 2016. But 80% of borrowers are below 5%. The big stat for you is that house payments are 115% higher than in 2020.  The monthly payment on a house is only $26 shy of the recent high. Buyers are applying for mortgages and searching for homes, but they are cautious. Sellers don’t want to sell to get a higher payment somewhere else.

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 price.

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.

I have some comments below on the tariff situation.

Key Stats

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

Last week’s SFH Inventory on Market: 702,000 (altos)
This week’s SFH Inventory on Market: 719,000 (32.5% higher than same week last year)

Listing volume – 76,000 new listings (12% higher than same week last year)

Sales volume – 72,000 new contracts (5% higher than same week last year)

This week’s TOTAL SFH in Contract status: 391,000 (2% higher than same week last year)

This week’s price reductions are Higher than last year at 35.6% (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 weekly data
This Week’s on-market SFH Median Home Price: no weekly data

Last week’s Median Price of Homes in Contracts: $399,000
This Week’s Median Price of Homes in Contracts: $399,000 (_% higher than same week last year)

Last week’s Median Price of New Listings: no weekly data
This Week’s Median Price of New Listings: no weekly data

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.

• Tarriffs are a big topic right now. I suggest this read.

  The goal is “reciprocal” tariffs with the countries that tariff us. There is no need to maintain the incredible trade deficit we have now. Renegotiating fair trade benefits American workers and industries. There is no obligation for America to keep funding other countries via trade imbalances, nor should we when we’re 36 Trillion in debt. I see guys like Erdmann saying tariffs are “dumb”, but it is difficult to understand his charting/logic when we feel the pain of imbalanced trade every day in the form of lower wages from manufacturing. I saw an article the other day lamenting the “pencil pushers” who make charts to justify everything while the practical pain continues to increase. I’m remaining in the camp of supporting policy requiring other markets open to us if they want ours open to them. Not saying anything bad about Erdmann, I understand his premise on the critical need for lower priced housing. I don’t see his rationale for it being better to let others sell to us here without us being able to sell to them. That creates a dependence on those nations to supply us goods. I’ll continue to study it.

• The temporary Tariff effect will play out over a couple of months until the posturing stops, I believe in our favor. 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. Notice 3 Trillion in development has already moved into the US. Everyone is already playing ball except China. They export 5 times more to us than we export to them. Yes 5 to 1. So let’s see what happens. Does it mean Americans pay a little more for a “made in America” product? Yes, and it will last longer, and that company now making more revenue will pay workers more, and those workers will spend the money on other things, sales of those things go up. Etc.. That’s how it’s good. ALSO, there are tax cuts coming, and those cuts will offset the effect of not being able to buy junk from China.
  

• 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. They’re going to try, but the consensus is odds are low.

• *** 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.

• 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. See 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 surged to 6.83% on April 17th, rebounding to the highest in two months after declining for four consecutive weeks. “The 30-year fixed-rate mortgage ticked up but remains below the 7% threshold for the thirteenth consecutive week....... source: Trading Economics

Mortgage application volumes in the US plunged by 12.7% from the previous week on the period ending April 18th, the sharpest decline since October of the previous year, and extending the 8.5% slump from the previous week, according to data compiled by the Mortgage Bankers Association..……... source: Trading Economics

Delinquency & Foreclosures

(Monthly as of February 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: Mortgage Delinquencies Continue to Slowly Rise with FHA Performance in the Spotlight

• The national delinquency rate edged up 5 basis points (bps) to 3.53% in February; that’s up 19 bps from a year ago but still 32 bps below where it was entering the pandemic

• FHA mortgages accounted for 90% of the 131K year-over-year rise in the number of delinquencies, despite making up less than 15% of all active mortgages

• 4,100 homeowners in Los Angeles are now past due as a result of the wildfires, up from 700 in January, with daily performance data suggesting that number could edge higher in March

• Foreclosure starts (-17%) and sales (-11%) eased in February, but are up (+34%/+7%) from the same time last year as VA foreclosure activity resumed after a year-long moratorium

• Prepayment activity (SMM) fell to 0.46% in February, the lowest level in a year, on higher rates and a seasonal dip in home sales

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

Find additional supporting data on our website

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