Mortgage Market Update - 09/15/23
Happy Friday, hope this finds everyone smiling and enjoying September for the amazing spectacle of sport that it is: the NFL season starts, there are multiple UFC events, F1 and NASCAR both have races, U.S. Open tennis plays out, LIV and the PGA have large tournaments (that’s still weird to say and an absolute lesson in itself, re: business [another conversation for another day])… there’s a lot going on.? In the world of real estate September is not that exciting, it’s actually the beginning of the end in terms of the busy season.? Below is California’s history for a visual:
Fast forward to 2023, what’s important to note is that we’re heading into the slow season with less inventory than we’ve had in the last five+ years.? Which, following the above historical trend line, means we’ll have the slowest winter in real estate since before 2017:
With inventory out of the way, like changing channels when the game is over, let’s switch now to inflation.? I honestly feel that listening to some “experts” talk about inflation right now is like watching a sport with someone who doesn’t understand the rules: They won’t stop talking, and they keep ruining your experience.? Don’t listen to the news, don’t listen to the online gurus, just dig into the Big Mac Index.? A solid summary can be found here, https://www.forbes.com/sites/davidmarotta/2023/01/13/big-mac-index-shows-official-cpi-under-reports-inflation-2022/?sh=135ce9ff10f6, and showcases how true inflation is grossly understated.? That said, we won’t dive into this week’s CPI report, but, if you need to read it, it can be found here, https://www.nytimes.com/live/2023/09/13/business/cpi-inflation-fed.
Some nonfabricated numbers for consideration: Home prices have increased 1,608% since early 1970, while inflation has increased just 644%.? $20,000 in assorted goods in 1970?would cost you?$148,800 today, but a?$20,000 house in 1970?would cost you?$341,600 today.? Homes outpacing inflation by 150% is probably why home affordability in America had its worse month, ever, in August.? If mortgage rates land above 7.24% at months’ end, September will officially take that crown and make homebuying the most difficult it’s been for Americans… Ever. ?With that in mind, if you can afford it, buying a home this winter, statistically speaking, might not be a bad idea.? As the above charts show, real estate activity decreases in the winter.? As the below chart shows, the potential for seller credits/negotiations increases in the winter:
Of course, you can always bury your head in the sand, watching an endless number of sports, as those you’re watching compete and progress in their life.? If you’d like to be more educated on anything above, so you’re able to make confident decisions in your own game of life, please don’t think twice to reach out… It’s an honor to share my knowledge with you.