You are probably right. I am just making the point that existing homes aren’t being sold because of higher rates. Lower rates will induce supply.
Yea that guy knew what he was talking about! This guy kk is a cheap version.
Well NJAR released their yoy price gains by county and the median was double digits haha.
2nd half NJ though? Always seasonal pricing. Price gains decelerate every 2nd half. So we’ll finish the year up but the pace of appreciation will slow in the 2nd half. Does every year.
If mortgage rates touch the 5’s next year, alottttt of people will get very uncomfortable with how much prices rise
Yes but if mortgage rates are in the 5s then two things will be true;
1- 5% mortgages means the economy will soften a lot so that the Fed cuts rates 4-5 times
2- there will be more inventory because people “mortgage-stuck” in their homes will be more willing to give up a 3% mortgage for a different home with a 5% mortgage. They wouldn’t do it at 6 or 7%.
I wouldnt be so sure about #2. Remember even if thats the case, the seller will be a buyer of another home so net inventory gain is zero
We need the economy to cool and the FED to cut rates. We will probably get to 5’s next year which is a historical norm. I’d be surprised if we get below 5% anytime soon.
I just quickly checked and you can find a 30 yr 6.25% rate pretty easily in NJ.
We moved to Harding in May of 2022 and I was able to lock in a 4.375% rate. I don’t expect to refinance anytime in the next 5 years.
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Asking the wrong guy. If I could predict interest rates I wouldn't be in real estate haha. It does seem the fed is cutting 2-3 times this year and then gradually down to neutral through 2025. So mortgage rates should be in the 5's next year. Got a client quoted at 6.125% today so not far off from the 5's as it is.
As long as you know the proper lenders you can already get some solid financing terms nearly 100bps below national average.
Historically speaking the only way you’d be able to refi a 4.3 rate would be due to a global catastrophe.
Historical spreads between 10 year treasury and 30 year fixed rate mortgages is 175bps. So once spreads come in, youd basically just need a 10 year treasury around 2.625% to get a mortgage rate of 4.375%.
There are lenders lending right now at 6-6.25% already. If spreads were normal, with the 10 year around 4.20% right now, youd see nationwide average mortgage rates be at about 5.95% with ARM’s in the mid to lower half of the 5’s.
That really doesn’t seem like a good deal on an ARM . To not even save a point .
Just some anecdotal info, over the past year the home prices in my neighborhood have seriously spiked. Looks like most of my town has experienced the same (southern Somerset County).
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I make monthly videos of this on Youtube about New Brunswick but it applies to many towns in NJ. Average closing prices keep climbing rapidly. The amount people pay over asking has been slowing down but basically if a house that was worth 500k and instead is listed for 600k and they pay 605k people point that people are not paying crazy over asking...but that's because the asking price has been elevated so much.
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Makes sense. In early 2023, normal homes in my area were going for $700-750k. Now they are listing for $850-875k and selling for even more. A few just hit the $900k level. And I'm not talking about the 4,000 sq ft Toll Brothers McMansions. These are 3,000 sq footers on modest lots. I guess just good old supply and demand. :)
My neighborhood has gotten crazy. 3 years ago 1500 square foot 3 bedroom 1.1 bath starter homes were 525K range. Now theyre about $800K
3,000 Sf homes on “modest” lots . Going for 900k lol
Rich people problems ! Donated to the field house
Most people take the ARM because it’s a lower initial rate and they don’t think it’s their forever home. From personal experience, I used ARMs until I realized I wasn’t moving until all the kids are done with school (15+ years). it also helps I locked in a 30 yr fixed at 2.50%.
Data? Link? Not my experience so im curious if theres data on this. Very very few ARM’s were taken out 2010-2022. 2nd half of 2022 to present theyve become more common, not because people dont believe theyre buying their forever home but rather they think theyll be able to refi into a lower fixed rate loan sometime on next 7 years
Quick google says ARM only accounts for 18% of all mortgages. However, it accounts for 45% of all mortgages over 1mm.
There is a serious risk of the recession now. If more people start to lose their jobs, do you think the housing market would collapse even though the rate is lower?
If we’re talking like 5-6% unemployment? Nope. Those hit hardest in recessions are the lowest income earners. Theres 161,000,000 ish employed persons in the US. 5% or lower mortgages would mean more for prices than 3,000,000 of the 161mm out of work.
Frustration Evident in Consumer Housing Sentiment | Fannie Mae
The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 1.1 points in July to 71.5, as an overall lack of affordability continues to hamstring consumer sentiment toward the housing market.
interesting take on limiting data on rental information in San Francisco ....and this is the reason rents are so damm high.."collusion"
specifically noted by C.Harris speech to "algorithms price fixing".......
https://www.pcmag.com/news/san-francisco-moves-to-ban-anti-competitive-rent-software
specifically noted by C.Harris speech to "algorithms price fixing".......
- The San Francisco Board of Supervisors has passed an ordinance banning the sale or use of revenue management software for the city’s rental housing.
- The ordinance, which passed on July 30 and still needs Mayor London Breed’s signature, asserts that the programs allow residential landlords to indirectly coordinate with one another, raising rents, lowering occupancy rates and increasing evictions. It cites lawsuits filed against two apartment revenue management vendors, RealPage and Yardi.
- If the ordinance is enacted, multifamily owners, operators or vendors that sell or use revenue management software in San Francisco could face penalties of up to $1,000 per violation, plus damages, restitution and attorneys’ fees. Usage violations would be counted per unit and month of use.
https://www.pcmag.com/news/san-francisco-moves-to-ban-anti-competitive-rent-software
Our boutique brokerage manages 300 different rental units in NJ. You don't collude because of software. You simply run comps and see what the demand is on rents. What will the tenant pay? Then you set the price. SF doing a great job chasing away business though. I use the equivalent of Yardi and they are great products.
Yeah the politicians view of this is completely one sides. Realpage had a rental analytics tool that was forward looking on rents. When it anticipated low supply, it suggested raises rents, when it anticipated high supply it suggested front running and lowering your rents before others. The only mention the former and not the latter though.
Sounds like dynamic pricing which is done everywhere. These remedial economic proposals are worrisome
Mortgage rates move with bond market, not fed decisions FYI. Rate cut is priced in current mortgage rates.
Correct, we have seen rates fall since the last week of August and strong credit borrowers can capture rates in the 5.5% to 5.875%, depending on type of property or down payment amount/percentage.
As always, feel free to talk or connect with Hawk (myself) with a quick text or email. My ad on the rivals website has been in place for a long time and should be back in time for the hoops season.
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This. Was already priced in. However in CRE majority of floating rate debt tied to SOFR so this helps. Rate cap costs have fallen nicely. Last September we bought a 12 month cap at a 2% strike on an $25.5mm loan and it cost us around $825K. Current pricing for that same loan of $25.5mm at a 2% strike was $498K this morning. Likely will be lower tomorrow.
Florida in storm impacted areas I have to imagine see less demand but thats just a guess from me not based on data
I have actually seen some softness in August and September. More inventory has come on market, which is good for buyers. IMO as rates drop, more seller will list and I feel like the market will balance out a bit.
New Brunswick alone we got 2-3 months of inventory dumped onto the market in August and also September. I have seen some softness in other towns as well...plus it's heading into fall which is when things start to slow down a bit. JMO.
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