June 6th, 2024 11:42 AM by Eric A. Willner, RFC, LUTCF, CSA
Midweek Mortgage & Market Report: Analyze The Market Like A Bank on The Real Estate Show
By Eric Willner, Host of The Real Estate Show, America’s longest running daily radio show about real estate.
Introduction
Good day, real estate enthusiasts! Have the news, media, and economy got you wondering if now is a good time to be buying or selling real estate? Well, you're in the right place for answers. Welcome to The Real Estate Show – South Florida’s #1 Real Estate Radio Show and America's longest-running daily radio show about real estate. My name is Eric Willner, known as the Voice of Real Estate. I'm the founder of America’s longest-running daily radio show about real estate and creator of The Automatic Landlord System for Owning Cash Flowing Real Estate “Profitably and Hassle-Free.” This show is a virtual real estate seminar in every episode.
This is the Wednesday Midweek Mortgage & Market Report edition of The Real Estate Show, where we continue to talk about why NOW is the right time to buy real estate using the theme: Think Like a Bank, Act Like a Real Estate Investor, and Get Financially Free!
Did You Know?
Did you know that understanding and adopting the mindset of a bank can significantly enhance your success in real estate investing? Today's show is all about thinking like a bank, acting like a real estate investor, and getting financially free. Knowing how this approach works is crucial to creating a plan that leads to success in real estate.
Special Free Workshops
Before we get into the meat of the show, let me remind you of this week’s special FREE workshops:
Do finances challenge you? Most people say YES!! So HERE is the Financial Edge. It’s the education and knowledge that moves the needle. We are your Financial Team. Let's talk about it...
The Financial Edge: A Three-Pronged Approach
Take the 72-Hour Challenge!
Let's continue to talk about why NOW is the time to buy real estate using insights from Monday and Tuesday’s shows. Let’s dive into the top trending topics for today’s update that affect wealth through affordable housing, help you gain independence, and give you peace of mind. Understanding the news helps you get organized and have a financial edge.
Current Mortgage Interest Rate Trends
According to BankRate.com, for today, Wednesday, June 5, 2024, the current average 30-year fixed mortgage interest rate is 7.10%, down 3 basis points over the last week. If you're looking to refinance, today's current average interest rate for a 30-year fixed refinance is also 7.10%, falling 5 basis points since the same time last week. Meanwhile, the national average 15-year refinance interest rate is 6.65%, remaining unchanged since last week. The consensus is that mortgage rates will ease down in 2024.
The national median family income for 2024 is $97,800, and the median price of an existing home sold in April 2024 was $407,600. Based on a 20 percent down payment and a 7.17 percent mortgage rate, the monthly payment of $2,207 amounts to 27 percent of the typical family’s monthly income.
"Borrowers remain sensitive to small increases in rates, impacting the refinance market and keeping purchase applications below last year’s levels," says Joel Kan, deputy chief economist at the Mortgage Bankers Association.
With mortgage rates well above pandemic lows, home sales have been sluggish. The National Association of Realtors reported that home sales in April dipped to an annual pace of just 4.1 million units.
Will Mortgage Rates Go Down?
Mortgage rates are tied to inflation. In a bit of good news, inflation is cooling slightly. The U.S. Labor Department reported in mid-May that the inflation rate had dipped to 3.4 percent. That heartened investors, but it’s unclear whether the Federal Reserve will cut rates any time soon. The central bank left rates unchanged in May, and the latest numbers show inflation is still well above the Fed’s target of 2 percent.
Mortgage rates are also influenced by investor appetite, particularly for 10-year Treasury bonds, the leading indicator for fixed mortgage prices. This can lead to intense rate swings — they soar on news of Fed hikes, then plummet in anticipation of a cut. Most Fed members still expect three rate cuts this year, but one regional Fed president now predicts just one rate cut in 2024.
Loan applications fell 5.7 percent this week, according to the Mortgage Bankers Association, while home prices remain elevated. While Realtors report upticks in inventory, many markets still don’t have enough affordably priced listings to meet demand.
Mortgage Demand Falls for the Second Straight Week
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 7.07% from 7.05%. Applications to refinance a home loan fell 7% from the previous week and were 5% higher than a year ago. Mortgage applications to purchase a home dropped 4% for the week and were 16% lower than a year ago. Mortgage interest rates moved to the highest level since early May, pushing mortgage demand lower for the second straight week.
Total mortgage application volume fell 5.2% last week, compared with the previous week. The average contract interest rate for 30-year fixed-rate mortgages increased to 7.07%, with points rising to 0.65 from 0.63 for loans with a 20% down payment.
“Mortgage rates moved slightly higher last week, with the 30-year conforming rate reaching 7.07 percent – its highest level since early May – despite incoming data indicating somewhat slower economic growth,” said Mike Fratantoni, senior vice president and chief economist at the MBA.
Applications to refinance a home loan fell 7% from the previous week and were 5% higher than the same week one year ago. Mortgage rates are still about a quarter of a percentage point higher than they were at this time last year, but some borrowers may be refinancing to pull out home equity.
Mortgage applications to purchase a home dropped 4% for the week and were 16% lower than the same week a year ago. Buyers are contending with higher interest rates, rising home prices, and fierce competition, especially on the lower end.
First-Time Homebuyers and Government Lending Programs
“Government purchase volume was down less, helped by growth in VA applications. The market is relying on first-time homebuyer demand, and many first-time buyers do use government lending programs,” Fratantoni noted.
Mortgage rates ended last week with a sharp drop on Friday and continued to slide this week. An employment report Tuesday showed job openings were lower than expected in April.
“Lower job openings connote lower rates, all other things being equal,” wrote Matthew Graham of Mortgage News Daily, noting that the government’s monthly employment report, set to be released Friday, will have much more influence on future interest rates.
“This could speak to a bit of anticipation for the rest of the week’s data to be similarly downbeat. The risk here is that the data manages to surprise to the upside and cause a volatile bounce back toward higher rates,” Graham added.
Investor Home Purchases Jump for the First Time in Two Years
Real estate investor activity jumped 0.5% from a year ago, according to Redfin. It’s the first increase in activity since mid-2022. This growth means more competition for buyers on the market. Real estate investors purchased about 44,000 U.S. homes in the first quarter of 2024, up 0.5% from a year ago, according to Redfin. The data tracks investor activity, which includes people or entities buying properties to sell or rent without intending to live there themselves.
What an Investor Home Purchase Means
In this context, investors are defined as any institution or business that purchases residential real estate, typically using a limited liability company (LLC) or another form of company or trust, to generate income or profit. Some investors intend to use the house as a part-time residence or vacation home.
The share of homes purchased by investors in the first quarter of 2024 was 19%, implying that around 81% of homes were purchased by non-investors, likely making them their primary residence.
Gauging Investor Effect
It’s complicated to gauge the investor effect on the housing market. A new report from Moody’s Analytics looked at the relationship between investors’ share of sales and homeownership rates on a metro-by-metro level and found a weak relationship between the two. This suggests that investors are not significantly crowding out traditional family buyers from the market.
Impact of Seasonality and Mortgage Rates
Part of the recent increase in real estate investor activity is due to seasonality, as more homes are typically sold during the spring. Additionally, mortgage interest rates were lower at the start of 2024 before picking up in April.
What Investor Interest Means for Buyers and Renters
If you’re a consumer buying on the market, you are competing against investors on top of other typical homebuyers. Investors purchasing homes for rental or resale purposes can affect availability and pricing for traditional buyers.
Conclusion
Real estate remains the best investment. Period. So get yours today! Remember, it’s a stone-cold fact that real estate is THE best investment.
**Today’s Show is Brought to You By: TimeFixMy
Also, you can listen to the entire 30 minute broadcast of any day’s edition of The Real Estate Show by clicking on the audio link on that days summary post. You can also watch the Facebook Live video at www.facebook.com/TheRealEstateShow.
Want to know more? If you are serious about real estate and paying off debt, then find out more on today and every day’s episodes and learn more about Real Estate Investing and learn HOW TO by listening to The Real Estate Show with Eric Willner , Live every weekday morning at 9 o’clock (EST) on Florida’s Money Talk Radio stations WWNN AM1470, FM 95.3 and FM 96.9. You can also hear us on the free apps: iHeart Radio and TuneIn. Recorded Rebroadcasts are available 24/7 on Facebook. Please share this and our Facebook updates.
Eric Willner is the Host and Founder of The Real Estate Show, an informative show about how to buy, own, and improve real estate the right way, on autopilot. - The Automatic Landlord way. (AutomaticLandlord.com) You can reach Eric Willner at Eric@Ericwillner.com or 888-595-7779.
Also listen to the rebroadcasts on demand on Facebook.com/TheRealEstateShow
#TheRealEstateShow, #The.Real.Estate.Show, #EricWillner, #AutomaticLandlord, #Saving vs Investing, #ThirdHome, #BestRealEstate, #WSBR, #AM740, #FM 96.9, FM 103.9, #WWNN, #AM1470, #MoneyTalkRadio, #TheRealEstateLife, #speakingempire, #GKIC, #makeamericagreatagain, #propertymanagement, #rent, #Saving, #Investing, #Debt Solutions, # So You Can Retire Debt-free, #RetireDebtFree, #VA Loan, #AutomaticDebtSolution