Rawson Reports: How’s the housing market right now?
Let’s jump right into this. The housing market, everybody is saying, oh s*** there’s going to be a crash, prices are coming down. is that true? Are our prices really going down or is this just one of those rumors of my demise being exaggerated. There is some price reduction, but the price cut is coming from ***much higher than the list price. So once the house is transacted, you know the market value, it’s still up from a year ago and we still have a s*** housing shortage. The market is not as hot as it was just a year ago. Uh, nonetheless, homes are still selling out fast and prices are still up from a year ago. I think *** a lot of us forget it before covid. In normal times you’d have to put your house on the market and it sit there for ***months, maybe ***months and ***half, two months before you sold it. And that wasn’t weird. Now, all of a sudden we have to wait s*** weeks and it’s like, OK, I guess it’s all done. You know, in some markets, for example, in California, they’ve seen a 40% increase on both market days. So now it’s five days on the market. So that’s how we are moving from the super fast, still very fast position in today’s market situation. So the market is not crashing to be clear. I mean are prices still stable or still only rising at ***, you know, *** a little low like this and *** a little high like that. Uh, it’s *** growing, but *** slower than before. got it. OK, so is this a *** buyer’s market right now or a *** seller’s market? I’d still say it’s seller’s market, inventory is still low. Uh, buyers, many of the offers are still not the same as before, but many offers are still happening on the market across the country for days, less than three weeks or very fast. But with mortgage rates so high, it essentially pushed some marginal buyers out of the market. I am glad you raised mortgage rates. So the Fed has raised 75 basis points for Fed meetings in the *** row. But sometimes I see mortgage rates actually s*** down a bit. What is the Relationship Between the Fed Interest Rate and Mortgages? Because how is it? I think it was like the day of the last 75 basis points growth. Mortgage rates have really fallen *** low. I think this is a very good question because all consumers and even realtors get confused at times because the correlation is not really direct. Uh, *** over a long time, there is some correlation. Now, the mortgage rate was essentially 3% last year today, up from 5%. But above 5% has already included several rounds of rate hikes by the Fed. So when the Federal Reserve actually announces and s*** with the new policy, the mortgage market is saying, oh, we already knew there was no big deal. So they’re already pricing it and they’re probably pricing and raising even more for the end of the year because the Fed has already said they close August, but they Come back in September, they’ve already said they’re probably going to increase it. We don’t know how important inflation is. So once inflation starts to show some sluggishness, it means the Fed won’t need to be aggressive or any new surprises, meaning mortgage rates could be out around 5.5% at the moment, not to mention it. See. crossed 6% at the end of the year. But it will be like the new normal and certainly not the super low 3% rate of the last two years. Correct? So it’s really still a very low rate, we just got used to the 2%, I bought my house when it was 8% the best decision. My parents bought their first house when the mortgage rate was 15% one of their best decisions ever. So if people want to buy a home for the long term, people buy, build wealth and they can always refinance downward because the mortgage rate goes up and what do you know it goes down too, What are your thoughts about an adjustable rate mortgage? ***Five year arm, seven year arm versus as**** in 30 year position ***Such position. uh the adjustable rate mortgage offers a *** a bit better chance to get into the market because interest rates are *** a bit lower. So do people who are buying starter homes, which typically live for five or seven years and then move on to their next home. So for these individuals, at least for the first five years, the monthly payment is fixed, it is not increasing unlike rent. So this might be a consideration for those who think they won’t last for a very long period and can enjoy that kind of low rates plus they a little less interest rate than 30 But entering the market. year fixed rate mortgage. So I don’t want to see it for *** buyer and *** seller. If you’re someone who has a s*** home now and you’re thinking about selling it in the next few years, put it on the market now or wait, well, you know that lifestyle changes are always going to happen. There are. *** New job at a different location, may be *** The person is getting married or divorced or the person is retiring. So these circumstances always motivate sellers as to when to sell. So it’s not a *** market timing issue, but life changing issues that determine sellers and sellers, just need to be very realistic about today’s changing market conditions, their neighbors who did it two months ago He had sold his house. So they think, well, I can get the same price. Maybe not, maybe even better now than it was a year ago, but maybe not as strong as when their neighbors sold the house a few months ago. And I’ll ask you the same question for buyers. If I am a *** buyer now, do I want to buy a *** home in the next one year, should I do it now or wait? There is less buyer competition in the market. So if the house is right, uh, someone else can negotiate a better price. And some home sellers, depending on their situation, may be willing to negotiate a price, but as the person waits for a s*** longer period, I would most likely say they still face higher prices. And that won’t get build up, but there will be more inventory options in future years. What are you predicting for autumn? For autumn? Things will calm down. House. Sales have been falling for five consecutive months. But I think most of the decline has already happened. So then later on, it will be a small increase, a small decrease while house prices continue to rise, but at a much slower pace. So by the October-November-December period, prices might be up by only four or 5% compared to the comparable period a year ago. What were they *** Years ago, he was up in 15%. this is incredible. People made ***a lot of money. Uh, not just someone entering the market last year, last two years or so in the early months of this terrible covid environment? Uh if there’s a civil lining that the people who brought the house locked in those low interest rates and they’re getting all this housing from the property value benefit of 20% to 30% over a period of two years. Let’s *** talk about rentals for the moment because the rental market is on fire right now, well, fewer people buying homes means more people renting homes and apartments. uh what’s your approach to it? Since leases are now out of control, the vacancy rate is low. In fact, it was even lower before the onset of Covid. So we had a s*** housing shortage. Uh and then we lost jobs during covid in the initial months. But with each passing month. Since then, as the lockdown lifted, more jobs were created, more jobs created and people got tired of living in the basement of their parents’ house. So they are looking for a *** rental unit, maybe somehow they can buy a *** house. But now they have to renew their lease due to high interest rate. So the vacancy rate is at a historic low, with rents growing very strongly at 6% from a year ago. uh and i guess, what’s your advice to people who are in that situation, can’t afford to buy a new house even if they wanted to because interest rates are going up they need to buy a new house Must sign the lease. How do you talk to your landlord? What kind of fare increase should I expect? And you know, how can I negotiate the lowest rent? You know, it depends on the local market conditions in Florida, increase. People can get some relief after seeing an increase of about 15 percent in the fare. So it depends on the rental market, but rents have increased by about 6% nationwide. But one way to possibly lower the rent is to, look, I see the water tap not working properly or maybe ask the landlord to fix some things. Instead of saying, I’ll do it. And it will certainly make the landlord very happy and probably even willing to reduce the rent. Uhhh and long term lease too. So *** the person thinks they will rent for the next 18 months, sign on for 18 months instead of six months, which gives the landlord more certainty. This is great advice. Any other advice I’m missing? Uh so we’re short in the housing market, but I think with more inventory coming on the line, things will get better in terms of housing’s ability to both buy and rent.
Many people are wondering what is happening with the housing market. Is it going to crash? Are home prices really coming down? Chief national consumer correspondent Jeff Rawson took these and other questions from Lawrence Yoon, chief economist at the National Association of Realtors. “Some are cutting prices, but the price cuts are coming from a very high list price,” Yoon said. “So once the house is transacted, the market value is still up from a year ago.” Yoon said there is still a housing shortage, homes are still selling out fast and prices are still up compared to a year ago. “So the market isn’t crashing, is it?” Rawson said. Yoon said the market is growing, but at a slower pace than before. Yoon also said that he believes it is still a seller’s market. He added that the inventory is still low and there are still many offers on homes. Watch more of Rawson’s face-to-face with Yoon in the video player above.
Many people are wondering what is happening with the housing market. Is it going to crash? Are home prices really going down?
Chief National Consumer Correspondent Jeff Rawson took these and other questions to Lawrence Yoon, chief economist at the National Association of Realtors.
“Some are cutting prices, but the price cuts are coming from a very high list price,” Yoon said. “So once the house is transacted, the market value is still up from a year ago.”
Yoon said there is still a housing shortage, homes are still selling out fast and prices are still up compared to a year ago.
“So the market isn’t crashing, is it?” Rawson said.
Yoon said the market is growing, but at a slower pace than before.
Yoon also said that he believes it is still a seller’s market. He added that the inventory is still low and there are still many offers on homes.
Watch more of Rawson’s face-to-face with Yoon in the video player above.