Housing Market Update: Home Prices, Mortgage Rates & Outlook

[00:01] housing market updates and we're focusing on home prices, mortgage and we're going to focus on first-time home buyers and what to expect. Okay, so we're going to get started by looking at home prices

[00:13] that, we're going to take a look at the local level. So you're looking at a five-year chart. This is the median sale price of a home in the US and home prices are up by 2.0% year-over-year.

[00:26] Therefore, I mean it's undeniable that there is no housing market crash. During the last housing market crash that started in 2008, home prices fell by 28% at the national level. Again, right now home prices are up by

[00:41] 2%. And as you can see by the five-year charts, there's no crash, you know, know, every year for the past five years now let's take a look at the local level. Year-over-year of the 300 largest

[00:56] metros in the US, home prices have fallen in 77 of those 300 markets. And the darker the red, the more severely that home prices have fallen. As you can see, Florida has seen the worst of it followed by California and

[01:11] Texas. So if you take a look at the image, Punta Gorda, Florida has fallen image, Punta Gorda, Florida has fallen the most down 7.9% year-over-year. take a look at Miami, it's only down by 2.1%, Orlando is down by 2.7% and Tampa

[01:27] is down by 2.8%. So yeah, those are down. I wouldn't classify that as a, you know, crash. It's just my opinion that housing still remains unaffordable and housing prices have not crashed. And now, I want to

[01:40] show you where home prices have been going up over the past year. Of the 300 largest metros in the US, home prices have went up in 223 of the 300 metros. And as you can see from the map, it's not as concentrated as the metros that

[01:55] are going down. So I don't see a point in, you know, listing out specific local So, I know there's a lot of housing market crash clickbait out clickbait for their livelihood, but personally, you know, I don't, so I can

[02:10] And this is the situation, and that's why nationally home prices are going up. Because in more places than not, home prices continue to inflate, and housing remains unaffordable. That's the truth.

[02:24] And this is important because home prices are simply determined by supply And if you want home prices to crash, then you need a flood of new sellers, but that's not happening. Year-over-year, the supply of homes has

[02:39] increased by less than 1%. The number of homes for sale is up by 0.7%. Okay, so as we're looking at this data the supply of homes, does this indicate that a housing market crash is incoming? Doesn't look like it to me.

[02:53] So, what did I predict in January? That there's not going to be a housing market crash this year, no housing price surge either. What did I say? I I said it's going to be a boring year. I said flat to up 2%,

[03:07] halfway into the year. So, my opinion that I issued in January Now, I want to show you the stats, which I believe doesn't get enough attention. So, this is a five-year chart. It shows what percentage of homes are currently

[03:21] being sold above list price. And I think that this is very important I've been telling everyone over the past five years that you shouldn't be waiting for a housing market crash. Like, if you're ready to purchase a home, then I

[03:34] like I've always been saying, go shopping, find a good deal, which, you know, I know, you know, realistically, I know that's not easy, it takes time. that 24.9% of homes are still being sold above list

[03:48] historically speaking that this isn't the normal range. That's about one out list price. But this is I mean if you look at the chart, this is a big improvement compared to 4 years ago when almost 50%

[04:02] price. And I want to show you this. So I always like revisiting this migration chart. This shows where people are leaving and moving to. So there's still larger outflows from

[04:14] California, New York, Illinois, and Washington. Florida still remains a top states where people continue to migrate towards. It used to be Texas in second place. However, that's now stabilized with now

[04:28] a small net inflow into Texas. Second place is now Arizona. You know, wasn't expecting that Arizona to be in second place. If you've moved there or you're moving to Arizona, please explain yourself. Please share why

[04:42] you know, you moved you you selected Arizona. Like I'm curious to know why. interest rates. This is a 10-year chart of the average interest rate on a 30-year fixed mortgage. Take a look at the good old days when

[04:54] the 30-year fixed was at 3% or below. And that was 2020, 2021, and 2022. In late 2023, mortgage interest rates nearly hit 8%.

[05:06] downward trend, but that downward trend reversed higher right here when we went So the reason for the reversal in the trend where interest rates started going higher was because energy prices shot up because of the Strait of Hormuz. So this

[05:22] caused the rate of inflation to go up. And with higher inflation expectations, went up. And if interest rates on government debt goes up, then mortgage interest rates follow. They go up as well. So

[05:35] currently, the average mortgage interest rate on a 30-year fixed is at 6.47%. That's because the war in Iran is de-escalating between the US and Iran. Like I know it's a fragile MOU and a ceasefire, like it's very very fragile,

[05:50] especially with Israel. But the opposite of what I showed you is happening. Oil flow is improving, cost of energy is decreasing, inflation expectations are lowering, and the rates on government bonds are decreasing.

[06:05] So the key takeaway here is that if the war continues or if it escalates, then mortgage interest rates are going to go higher. If there's de-escalation, then mortgage interest rates will come down. In terms of housing affordability, I

[06:18] So look at how bad the situation has gotten for first-time home buyers. There is now a record 242 cities in the US that now have starter homes going for $1 million and above. A starter home is defined as a home in

[06:33] the lowest 1/3 of home prices in a given region. In 2020, it was at 80 cities in the US. Last year, it was at 226 cities. Now it's at 242 cities. Okay, so California has the most cities with million-dollar

[06:49] starter homes with 105 cities where the typical starter home is $1 million or more. In second place, you have New York with 41 cities. This is up from 12 before the pandemic.

[07:01] In third place, you have New Jersey with 26 cities. This is up from one before the pandemic. So it's been a bad situation for millennials. It's a ridiculous situation for Gen Z. I

[07:14] have no idea how Gen Alpha is going to afford a home family. Listen, the golden rule is that you should not be spending more than 30% of your income on housing. Right now, the

[07:28] median salary of a young professional ages 25 to 34 stands at $59,000 a year. home with today's interest rates, and let's Let's say that you miraculously

[07:41] find a way to put down 20% on a million-dollar home, you know, which is going to be 200k, then to stay within the 30% rule, you need to make $202,000 a year. Now, let's just say you put down 5%,

[07:54] right? Then you need to be making $242,000 a year, which is way more than of course the $59,000 a year are making.

[08:06] you. The way I'm reading this is that these numbers are just not workable anymore in 242 cities in the US. Like if you ask me why this is happening to me, this is simple. Wages have not kept up with inflation. Listen, the only

[08:22] way that housing is going to become affordable again is if home prices crash or if wages start going up more than inflation or if it's going to be a combination of both. But again, you know, I called it correctly for the

[08:34] past, you know, every year for the past 5 years and I don't expect a housing market crash this year. And I don't expect wages to outpace inflation, you know, as usual. Additionally, the housing market has the

[08:46] support of President Trump. Like if you remember that video clip of President Trump saying that he wants home prices to go up. So, I'll tell you that no, I situation to improve anytime soon. Like I know that's not what people want to

[08:58] that I'm just being honest, that's the truth, which is why I encourage people to purchase a home if they're financially capable and not try to time the markets. Again, look for a good deal, you know, take your time. The

[09:12] average time to find a home and close is about 5 months. But for me personally, months. So, that's your housing market update. support and wish you a very nice day. Take care.