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. the question is it is increasing at a higher rate than last year? Yes slightly. Seller supply remains constricted. The national inventory remains 25% below 2020 levels. Some parts of the country are back to “normal,” and others are still low inventory.

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 2020.  The monthly payment on a house is only $26 shy of the recent high. Buyers are applying for mortgages and searching homes, but they are cautious.

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: 656,000 (altos)
This week’s SFH Inventory on Market: $668,000 (30% higher than same week last year)

Listing volume – 70,000 new listings (15.5% higher than same week last year)

Sales volume – 69,000 new contracts (2.3% higher 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 34.3% (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: $390,000
This Week’s Median Price of Homes in Contracts: $393,825 (1% higher than same week last year)

Last week’s Median Price of New Listings: $439,000
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. 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. Notice Billions in development by Honda and others have already moved into the US.
  

• 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 recently 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. 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 rebounded to 6.67% on March 20th, rising from the lowest levels seen since early December for the second straight week, although slightly. “The 30-year fixed-rate mortgage has stayed under 7% for nine consecutive weeks, which is helpful for potential buyers and sellers alike,” said Sam Khater, Freddie Mac’s Chief Economist... source: Trading Economics

Mortgage applications in the US fell by 2% in the week ending March 21, following a 6.2% drop in the previous period, according to the latest data from the Mortgage Bankers Association. Applications to refinance a home loan decreased 5% from the previous week to the lowest level in a month. In turn, applications for a mortgage to purchase a new home rose 1%. Meanwhile, the average rate on the 30-year fixed mortgage dropped to 6.71% from 6.72%……... 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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Corey & Team
Fidelis Wealth Builders

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