What’s Happening in the Mortgage/Real Estate Market 6.22.2022
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Hello everyone. Keith Renno here, and welcome back to the channel or my website, wherever you are viewing this video. Thank you for joining me. Would like to give a bit of a market update. It’s the first day of summer, and what is happening in the mortgage and real estate market? There has been a lot of shifting. We’re hearing that word a lot, shift, a lot of shifting over the last couple of weeks. That is really because we’ve seen a quick and kind of swift upward movement in our interest rate environment. That’s caused a lot of people to pause and wonder, “Hey. How’s that going to affect home prices? How is that going to affect the overall real estate environment?”
Let’s go back to what we really know and what we can really hang our hat on, and that’s the data. The data strongly supports that we have a lack of inventory across the US. Granted, there might be some areas here and there and some pockets where we have had a lot of building, maybe some overbuilding. But that is, I should say those areas are few and far in between. For the most part across the US there is a lack of supply out there. That’s because there’s been a lack of building from our last crash back in 2008, 2009. Builders have not kept up with the pace of what would be normal building or the normal number of new construction properties that we see come on the market on an annual basis.
That number has been off for many, many years. Well over a decade we’ve seen that number very low. We’re really feeling it at this point, that lack of supply out there. Now speaking to the demand, yes, we’re seeing interest rates tick up a bit. Yes, that hurts a buyer’s buying power. Perhaps some folks on the fence have decided to maybe pause and wait and see what happens in the market. But there are still a strong number of buyers out there that are ready, willing, and able to purchase the right priced property coming on the market for them. We’re seeing first-time home buyers to seasoned investors.
I emphasize the seasoned investor because we’re seeing more and more investors, whether it’s a mom- and-pop, maybe an individual, stepped in and looking to purchase that first investment property, to major hedge funds with billions of dollars that are putting a lot of data in research that are now stepping into the market and buying real estate. Buying for the most part what is known to be the greatest wealth creator in the US, really in the world. Also, when it comes to taxes, hedging inflation, real estate and a lot of the components tied to real estate are very forgiving and very favorable in the overall financial market. That’s another video to go into more detail on that topic. But again, the pool of buyers is still relatively large out there.
I touch on the investment buyer because we’re seeing more and more investment money come into the market. So if you are a first-time home buyer or perhaps looking to purchase a home for yourself, keep in mind you’re not just competing to the individual next door to you, you’re competing against money really all over the world at this point in time that is looking at US real estate as a relatively safe, secure investment in these uncertain times. I think that’s the reason why most folks … Again, polls show that across the US that most folks still anticipate that our US real estate will be the number one wealth creator and the strongest asset that we can hold as individuals.
So again, what’s going on in the market? Yes, shifting. Yes, we’re seeing interest rates they have moved up with the Fed’s movement. They are trying to counter inflation, so the Fed increasing that Fed Funds Rate, that is actually a good thing when it comes to the 30-year fixed rate, or could be a good thing when it comes to the 30-year fixed rate, if it all shakes out as the Fed is hoping and planning. When the Fed increases that rate, that’s to counter inflation. Inflation is the enemy of our bonds. It’s the enemy of our fixed security and our mortgage-backed securities. That is where the 30-year fixed rate is derived from. Not that Fed rate, but from our actual mortgage bonds.
When inflation is high, when inflation is a concern, and inflation is eroding the dollar, it’s eroding a long- term bond, that is not a good thing for our long-term fixed rates. That is a big reason why we’ve seen the 30-year fixed interest rate really increase because there’s a lot of talk, and worry, and data, showing inflation. So the Fed increasing rate, they increased the rate three quarters of a point here recently, then coming out taking that strong stance, increasing that rate, that is to counter inflation. So hopefully in the long run, that will be a good thing for our 30-year fixed, and we’ll see that 30-year fixed rate come back down a bit.
But what I’m sharing with folks is, “Hey. If you have a right opportunity to purchase a home, whether it’s as an investment, as your primary residence, with the lack of inventory out there, I don’t foresee that really changing here in the foreseeable future. If you have an opportunity to get in, and you can afford the payment, you’re not going to put yourself in a stressful financial position, I think now is very much so the time to do it. I don’t see a crash. I don’t see a bubble popping in this market so to speak. Then if rates improve in the future and you already own that asset, you’re already in that piece of real estate, well
then you should have opportunity to perhaps refinance and take advantage of the lower rate in the future.”
So again, if you think the timing could be right for you, whether you looked into your numbers or not, if not already I would encourage you to do so, and if you are at that point I would continue to keep your foot on the gas until you find the right home for you, your family, overall financial situation. And unless there’s more data that comes out that shows and supports that we are in some sort of bubble, and we’re going to perhaps see a market crash, I don’t see a reason to back off the home-buying game here and real estate continuing to be, as I mentioned a few times here in this video, the number one wealth creator that we have here in the US.
Hope you found this information insightful. I’ll continue to be putting videos out here on a weekly basis. Please Like, Comment. Feedback is appreciated, welcome. Any topics you’d like me to touch on, please leave them in the comments below. And thanks for spending a few minutes with me here today. Take care.
Senior Loan Originator
Over the past 15 years as a mortgage professional, closing on average 150 loans per year, I have gained a wealth of knowledge and experience about the mortgage industry. My goal with this website is to give you just the INFORMATION you need about mortgages with ZERO sales pitch. I hope you find my posts of value and share it with 1 other person who might find value in it as well.