A Surge in Single-Family Home Construction | 1-Minute Market Update w/ Martin Perdomo

Is the housing market crashing or just shifting gears? Tune in to this week's real estate update for a deep dive into the latest housing market trends. We're breaking down the numbers on home loan applications, online house searches, and average home prices to uncover potential market shifts.

Discover why housing inventory is on the rise, what it means for buyers and sellers, and how long homes are staying on the market. Plus, we'll explore the rebound in single-family home building after a recent slump. Learn about the challenges facing builders, including rising mortgage rates, construction costs, and labor shortages.

Get expert insights on the potential impact of interest rate cuts and how they could shape the future of the housing market. Whether you're a seasoned investor, first-time homebuyer, or simply curious about real estate, this episode is packed with essential information to help you make informed decisions.

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Transcript

Speaker 1: 0:29

Looks like single-family homes are skyrocketing this month. 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 July 19th 2024, and this is your weekly real estate market update. This week, the number of people applying for home loans dropped 3% this week compared to last week. That's even worse if you look at the bigger picture. The number of people applying is down a whopping 14% compared to this time last year. People are searching for houses online 4% more this month than last month, but don't get too excited. Searches are actually down a full 20% compared to this time last year, so that there might be a tiny uptick in.

Speaker 1: 1:16

Interest is still way lower than before Right now. The average price tag for a house sold this week is a whopping $396,379. Yeah, you heard that right. That's how much you'd probably need to shut out for a typical house in this market right now. Speaking of prices, the price tag people are asking for homes right now is a crazy $404,998 and average. So if you were to buy a house right now, the average person is now shelling out a whopping $2,722 every month for their house payment and interest rates on those mortgages are sitting pretty high at 6.89. That's still better than the sevens and even eights we hit early last year in some cases. But 6.89, I think it's more reasonable, is more digestible and if you were looking at the market, there are way more houses for sale now. Compared to last year. The number of new homes on the market has jumped by 6.4%. Speaking of inventory, there are more houses on the market now than there were last year. The number of homes you can actually buy has gone up almost 20% guys, according to Refn. That's a big jump.

Speaker 1: 2:34

Lastly, houses are hanging around on the market for a little longer now. It takes an average of around 32 days to sell a house, which is four days longer than last year. So buyers have a bit more time to think things over now, in my opinion. As an investor, as a seasoned investor, a flipper I buy, I hold, I play, I play in this business at the time right Full time I don't think that 32 days is not bad. 32 days building time is still not bad. I remember the time where I was mentored by my mentor. Whereas you calculate 90 days before you actually get an offer, that's about normal right 60 to 90 days before you get an offer. We're talking 32 days. That's a third of what I was taught in the way a normal market works.

Speaker 1: 3:14

Single family homes are starting to rebound this month. What could this mean to you? In June, the US saw a drop in single family home building to an eight-month level, primarily due to rising mortgage rates that makes sense which dampened the housing market and likely hindered economic growth. In the second quarter, permits for future single-family homes also decreased to a one-year low, suggesting that even if the Federal Reserve cuts interest rates later in the year, a significant rebound in home building might not happen quickly. Despite these challenges, the overall housing market remains tight, with a shortage of pre-owned homes keeping prices high and making homeownership increasingly difficult for many Americans. July brought a slight improvement, with single-family housing starts rising by 6.7% from the previous month, partly driven by continued demand and a lack of existing home inventory. However, the market still faces construction and financing costs yes, it does, I certainly know that firsthand as well as a shortage of skilled labor. Yes, it does, I certainly know that one firsthand too. The over-the-ramp housing starts, including multifamily dwellings, increase by 3.9% month over month.

Speaker 1: 4:29

Experts warn that, while builders are striving to meet demand for New Lime's, higher mortgage rates continue to challenge affordability and housing market is not fully recovered. So I have some thoughts on this. Absolutely, building permits are down. That makes sense. The cost of construction is way on high, guys. So when you look at a loan right, when you look at these interest rates and you realize that they're at 6.89 for a 30-year mortgage is a very different type of loan that us developers and redevelopers have to go get we we have to go get bridge loans. Those bridge loans are 10, 11, 12, 13, 14 percent right, depending on the leverage you're getting. We're paying interest only on those loans and they're for a short period of time and it's expensive.

Speaker 1: 5:11

When you add the cost of material going up, a shortage of labor and everything else around it, it makes it really difficult for guys like myself and other developers and redevelopers to go out there, get financing and provide more housing. This is why, if you're not in real estate, you should be, because, as you may or may not know, we have six to 10 million new immigrants, new people that came into this country. We have an influx of population, but there's an influx of population, there will be a demand for housing. When there's an influx of population, there will be a demand for housing. So what's happening now is that, as these permits have gone down and buildings slowed down, that's going to create a bigger shortage in three, four, five years, when interest rates come down and people want to flood the market, inventory is going to go way back down. It's just common sense, in my opinion, logical like one plus one equals two and two plus two equals four. And this has been your weekly real estate market update. I'll see you guys next week. Peace out.