High Prices and Low Buyers Mystery | 1-Minute Market Update w/ Martin Perdomo

Why do low interest rates fail to attract homebuyers? In this week's real estate deep dive, we unravel the complexities behind this puzzling trend. Tune in as we dissect the latest market data from June 21st, 2024, and explore why mortgage applications are down 12% from last year, despite a slight weekly uptick. We'll discuss the staggering 21% drop in house searches, soaring home prices reaching an all-time high of $396,000, and the hefty median asking price of $411,749. With current mortgage payments averaging $2,781 monthly, it's no wonder potential buyers, especially millennials, are feeling the pinch.

Our episode also brings a glimmer of hope with a 7.7% increase in new listings and a 16.5% rise in the number of houses on the market, giving buyers more options than before. We'll delve into the lag in response to falling interest rates, economic uncertainties, and fierce competition from investors and cash buyers that are keeping many out of the market. Whether you're planning to buy, sell, or just stay in the loop, we break down the factors contributing to today's volatile housing market and what it means for you. Join us for an insightful discussion that cuts through the noise and provides clarity on the real estate landscape.

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Transcript

Speaker 1: 0:29

So here's the housing market mystery why aren't buyers biting at the low interest rates? I'll talk about that in a minute, so before that, let's take a look at this week's housing market data. Today is June 21st, 2024, and this is your weekly real estate market update. There's been a little bump in the mortgage applications this week, up 2% from last week. That's good news, but hold on, it's not all sunshine and rainbows. Compared to last year, things are a bit cooler. Applications are down 12%. So the housing market is showing some mixed signals right now. This makes sense.

Speaker 1: 1:06

I've been reporting, actually on my Instagram, on my stories. I've been putting the 10-year treasury. It's been coming down since the inflation report and since the last Fed's meeting. If you think people are scrolling Zillow this month, you've guessed wrong. It's the same as last month, remained unchanged, but compared to last year, searches for houses are down a whopping 21%. Looks like the formal to buy a house might be cooling off.

Speaker 1: 1:35

House prices are through the roof right now, though. The medium sales price just hit an all-time high of $396,000. That's the biggest jump since way back in March. So if you're thinking about buying a house, you might want to rethink that, because the median asking price is currently at a whopping $411,749. That's a hefty chunk of change. So this might be a big dent in your budget. And, aside from that, the current mortgage payment is no joke either. At 6.95% interest rate, the median monthly payment is $2,781. That could eat up a big chunk of your paycheck.

Speaker 1: 2:17

But here's some good news. If you're actually looking for a home, new listings are actually up 7.7% compared to last year, so you'll have more options to choose from. This means less scrolling through endless TikToks and more house hunting. This means less scrolling through endless TikToks and more house hunting. Aside from that, the number of houses on the market is up a whopping 16.5% compared to last year. This means more options to find your dream home. Lastly, houses are actually selling faster than usual, but not crazy fast.

Speaker 1: 2:48

Currently, houses are typically on the market for around 31 days. Currently, houses are typically on the market for around 31 days. This means things are moving a bit quicker than usual, but you shouldn't feel pressured to make a snap decision. Find the property that's right for you and that fits in your budget. And here's what's up with the housing market recently, despite the interest rate dropping to their lowest since March, fewer people are applying for mortgages.

Speaker 1: 3:08

This seems odd because lower rates usually means more folks want to buy homes or refinance to save money. Yes, while rates lower, typically it brings the buyers back, but that's a lag indicator. It usually has to stay low for a certain amount of time before the buyers come back out. Just because rates lower one week doesn't mean that buyers are going to come out the woods. It doesn't happen that way. It has to circle, cycle through the market. The information has to get to regular working class people. This information doesn't get out that quick to regular working class folks, folks like us. If you're looking at this, listening to this podcast or watching this video, folks like us know, but the average person is not necessarily paying attention to this stuff day in and day out.

Speaker 1: 3:53

Experts think one big reason is the high prices of homes in many areas. Even with the cheaper borrowing costs, these expensive homes are scaring off potential buyers, especially millennials, who find it hard to afford them. Another factor could be uncertainty because job and the economy when things feel unsure, people might hold off on taking out big loans like mortgages, even with lower interest rates available. The housing market itself has been unpredictable, with not enough homes available and strong competitions from investors and cash buyers. So while low interest rates typically drive up mortgage applications, today's market is a bit different. High income prices, economic uncertainty and volatile housing market are keeping the demand for mortgages from rising. This shows how complex the housing market can be and challenges what young buyers face in today's real estate world.

Speaker 1: 4:42

To my point I made earlier, this stuff doesn't happen overnight. Real estate moves really really slow, so rates have to stay consistently low for a few months before that information gets disseminated and people start to feel comfortable, because there's a lot of uncertainty with the feds. And what's going on with the feds? Economic data, with inflation, with jobless claims these are all the things that need to improve in order for the feds to say okay, we feel comfortable at lowering the rates and then keeping them there sustainably long-term. I'm of the school that I want to see rates come down Number one for the American people, for affordability and for selfish reasons. Obviously, I'm a real estate investor. The cheaper the money, the more business I can do. And this has been your weekly real estate market update. I'll see you guys next week. Peace out.