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Mortgage and Real Estate News For Friday December 27th, 2024
The mortgage and real estate markets have fluctuated due to inflation, job statistics, foreclosure, and home prices, all notable developments considering the rising mortgage rates. Here’s the recent trend. The article will also provide information on the ever-changing but somehow related business economics.
Mortgage Rates
30-Year Fixed-Rate Mortgages:
- According to the most current statistics.
- The average 30-year fixed-rate mortgage increased to 6.85%, which has been the highest recorded since mid-July.
- The percentage was 6.72% last week, compared to 6.61% recorded a year ago.
- This is a clear sign of raised bond yields banks use to sell home loans.
15-Year Fixed-Rate Mortgages:
- Closed at 6%, up from 5.92% recorded the previous week.
Employment and Job Losses
In considering the labor force, indicators highlight its potential decay due to students’ inability to find summer jobs, resulting in aggravated unemployment reaching 6.4%.
Inflation
The growing economic debate on whether federal banks should pay particular regard to inflation is apparent, especially considering the recent US statistics indicating inflation is growing to 3.2% annually.
It is projected to keep increasing, impacting mortgage rates and the overall economic spectrum.
Foreclosure Rates
There are no seasonal statistics or trends regarding foreclosures at present. However, the growing interest and inflationary rates can complementarily lead to further foreclosure activity, as people who need to deal with further economic stresses alongside rising home loan interest rates may find themselves unable to cope and eventually file for bankruptcy.
Home Prices
Despite the hike in mortgage rates, home prices remained steady. Due to high demand and low housing inventory, the price of homes in the United States is predicted to increase by 5% this year, higher than the previous prediction of 1.9%.
In the UK, it is estimated that house prices will increase by 1.9%, bringing the average value of a house to £267,500. The increase in market activity is expected to impact the housing market positively.
Factors Influencing the Market
Bond Yields Increased bond yields are the reason mortgage rates are increasing. This affects the low number of homebuyers.
Federal Reserve Policies Other policies cut rates to improve affordability, but in contrast, the rate cuts resulted in increased mortgage rates. This is because the 10-year Treasury bonds have increased yields, which wreaked havoc on mortgage rates.
Housing Inventory
Even with the increased mortgage rates, there is a limited number of houses, which keeps the prices of the homes steady. Owners with low mortgage rates are reluctant to sell their houses, contributing to the low supply.
Implications for Homebuyers and Homeowners
Affordability Challenges Due to the increased price of homes and mortgage rates, the supply of houses has greatly diminished, which has resulted in many unfavorable implications, such as a decrease in mortgage applications.
Increased Costs
The property tax rate has historically been low, around 32% in recent years. Still, as of 2014, mortgage rates and insurance expenses have virtually skyrocketed.
The increased mortgage rates, inflation, and economic instability make it almost impossible for potential buyers and homeowners to afford their properties. With the market as fuzzy as it is, it’s worth getting advice from an expert and staying updated with the latest economic information.
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14 Replies
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Concerning the latest mortgage and real estate news for December 27, 2024. This was released on the [Insert Date]. Here’s what you need to know:
Mortgage and Real Estate News – December 27, 2024Mortgage Rates
Current Rates:
- The average 30-year fixed-rate mortgage rate was 7.5% in the last week of December 2024.
- This slight drop can provide prospective home buyers with efficient housing opportunities.
Market Impact:
- These changes have been propelled by the news that the Federal Reserve is considering reducing or halting any additional interest rate hikes.
- This is based on the economy and recent economic data about inflation shocks.
Inflation
Current Trends:
- According to the reports retrieved for December, inflation rates have dipped towards the 3.6% mark year over year.
- This information further supports potential legislative changes on monetary matters.
Impact on Real Estate:
- In hindsight, lower inflation rates would change the housing environment for buyers.
- Encouraging more home purchasing opportunities by 2025.
Job Losses
Labor Market Overview:
- According to Cent’s analysis, job layoffs have rocked the American job market.
- Current estimates consider that over 300,000 jobs were lost in key manufacturing and retail sectors in December.
Economic Implications:
- Such job losses trigger fears regarding consumer effectiveness, which may impact housing market demand in the coming months as potential buyers assess the situation differently.
Foreclosure Filing Rate
Presently:
- Foreclosure filing rates have risen.
- A 15% increase in filings was noted relative to the previous year.
- The rising costs and job losses have made it hard for many homeowners to make mortgage payments.
Differences Between States:
- Some states with high house purchase costs witness higher foreclosure rates, leading to appeals for greater measures to help them.
Home Prices
Trends:
- Home selling prices have not been uniform.
- Although the national average home selling price remains steady at mid $350,000, some markets are recording price drops this time, as are any markets recording an upsurge of activity.
Regional Differences:
- The Phoenix and Austin areas recorded a 5-10% price decrease.
- At the same time, the Midwest, faced with limited holdings, continues to register a stabilizing or increasing rate of prices.
Look ahead to 2025
Market Development:
- The housing market may start being stabilized in 2025.
- But will be influenced by the pace at which jobs are recovered, and the inflation actions continue.
- There is expected to be more interest in good affordable housing once the other buyers join the quest.
Investment Opportunities
Investors turn their attention to distressed properties and foreclosures to profit once the housing market recovers.
The current state of the mortgage and real estate sectors is marked by high rates and increasing foreclosure and job loss rates, which affects home prices and the attitudes of prospective buyers. In 2025, key factors such as inflation, economic growth, and housing requirements will determine how the market develops.
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Which Midwest regions are showing stable or increasing home prices?
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In the Midwest, several regions have home prices that are either stable or on the rise. These selective regions are:
- Chicago, Illinois
- Madison, Wisconsin
- Indianapolis, Indiana
- Minneapolis-St. Paul, Minnesota.
Chicago, Illinois
Market Overview:
- The demand for Homes in Chicago has remained consistently strong.
- Especially In the suburbs.
- The lack of available housing has allowed several neighborhoods to increase their prices.
Indianapolis, Indiana
Market Overview:
- With Indiana’s economy expanding, People from out of state and in are flocking to Indianapolis.
- To some citizens, housing isn’t a problem and is very cheap compared to the rest of the US.
- Because of this, Job opportunities have also increased.
Columbus, Ohio
Market Overview:
- Columbus thrives in the housing sector thanks to its booming economy.
- Housing prices and job opportunities are expected to rise with the population growing steadily.
Minneapolis-St. Paul, Minnesota Market Overview
Housing prices in the Twin Cities are steadily increasing alongside the economy. Several reputable education institutions are in the area, and the demand for housing has increased greatly.
Madison, Wisconsin
Market Overview:
- The Madison area has also experienced an increase in selling prices for houses due to the lack of available inventory.
- With the University Of Wisconsin nearby, students and residents are looking for housing, making supply a problem.
Grand Rapids, Michigan
Market Overview:
- The economy, population, and the art, culture, and music scene in Grand Rapids have collectively contributed to a robust surge in home values in the area.
- The region is still good for new home buyers and people looking to retire.
All the Midwest regions are showing an increase or not a decrease in home prices due to new job opportunities, low availability of homes, and good living conditions. These areas will appeal to potential buyers as the economic scenarios change.
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What are the projected home price increases for these areas in the next year?
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Here are the projections for home price changes in the Midwest Region for the coming year:
Chicago, Illinois
Expected Change:
- With the restoration in requirements and supply shortages, especially in high-supply markets, home prices rise between 3% and 5%.
Indianapolis, Indiana
Expected Change:
- Due to continual economic growth, new residents joining the city will increase home values by 4-6%.
Columbus, Ohio
Expected Change:
- In Columbus, competitive housing markets and growing job opportunities will likely increase prices by 5-7%.
Minneapolis-St. Paul Minnesota
Expected Change:
- Due to a growing economy and stable requirements, the Twin Cities are predicted to see a 3-4% home price increase.
Madison, Wisconsin
Expected Change:
- The increase in popularity among families and young professionals is expected to raise home prices by 4-6% in Madison.
Grand Rapids, Michigan
Expected Change:
- The Grand Rapids community will likely experience a growing economy, increasing prices by 8-5%.
In summary, the Midwest region has a fair chance of a better economy, which would promote house prices. Everything points to a better market situation, from housing supply to available demand. However, in the end, it all will depend on local and national market trends.
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How do these increases compare to national averages?
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The projected home price increases in the highlighted Midwest regions can be compared to national averages as follows:
National Average Home Price Increase
Projected Increase:
- Nationally, home prices are expected to rise by about 3-5% over the next year.
- This average reflects a more moderate growth rate than in previous years as the market adjusts to economic changes and higher mortgage rates.
Comparison by Region
Chicago, Illinois
- Projected Increase: 3-5%
- Comparison: On par with the national average.
Indianapolis, Indiana
- Projected Increase: 4-6%
- Comparison: Slightly above the national average, indicating stronger demand.
Columbus, Ohio
- Projected Increase: 5-7%
- Comparison: Above the national average, reflecting a competitive housing market.
Minneapolis-St. Paul, Minnesota
- Projected Increase: 3-4%
- Comparison: Slightly below or on par with the national average.
Madison, Wisconsin
- Projected Increase: 4-6%
- Comparison: Above the national average, indicating strong local demand.
Grand Rapids, Michigan
- Projected Increase: 5-8%
- Comparison: Significantly above the national average, suggesting robust market conditions.
Many projected increases in the Midwest align with or above national averages. This indicates a relatively strong real estate market in these areas, driven by local economic conditions, job growth, and demographic trends. In contrast, the national market is experiencing more tempered growth as it adjusts to economic pressures.
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I have watched mortgage and real estate news, YouTube videos, and podcasts. There seem to be a lot of videos about the housing market tanking and losing 50% of its value. Many are saying foreclosure rates are at historic highs. Others say many condominium complexes are going bankrupt, especially in Florida, due to high mortgage rates, property taxes, homeowners insurance, and homeowners association fees. What merit do these stories have, if any, or are they these YouTubers with clickbait to increase their viewership so they can capitalize and monetize on subscribers and views?
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This reply was modified 1 month ago by Gustan Cho.
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Concerns about the housing market, the rate of foreclosure, and the issues encountered by condominium complexes are sometimes overused for drama. The claims made in such a have some real substance. Here’s a breakdown of the merit behind these claims:
Recession In The Housing Market
Market Setbacks:
- Reports claiming certain areas, such as San Francisco, are experiencing a decrease in housing prices relative to New York City or Washington DC-type regions where prices surged during the pandemic might be true.
- But saying that the whole economy is expected to suffer a depression is an exaggeration.
Micro Focus:
- Taking even a single region into account, a distinct real estate market can be observed.
- Some areas may see a drop in demand while others hold the fort.
- Some, besides growing, witness a shift in demand dynamics.
The Rate Of Foreclosure
Increasing Foreclosures:
- While house repossession can be an option for most lenders, rates haven’t been this high since the emergence of the pandemic, which has resulted in ultra-low interest rates.
- However, the high is relative, as we aren’t witnessing historic highs across the globe. Perspective matters.
The State Of The Economy
Some factors, such as job layoffs, inflation, and an exponential increase in interest rates, contribute to raising foreclosures. However, the good news is that many homeowners still hold considerable property equity, meaning widespread foreclosures are unlikely.
Condominium Complexes and the Rise in Spending
Sure, Property has been a haven for many people, but at the same time, ask anyone in Miami whether purchasing a condo is a cost-effective and economical decision, and they’ll tell you it is not. Economically speaking, high prices, undesirable services, expensive HOA fees, and existing mortgages for owned properties can be a dreadful economic situation. And if this is the case in the US, consider the developing world. This would truly explain rising debts in the US.
Condo Dynamics
But that is not the end. To maintain and build a condo’s reputation, local markets must focus on local demands, well-trained management tools, and a stable economy.
Feeding Fears Using Clickbait
Making Money:
- As a father, my motto is and always will be, ‘Never lie to your kids.’
- However, many YouTube channels use a different strategy.
- Instead of being honest with their viewers, they spam attractive thumbnails with insane predictions.
- Some seem to have real concerns, but most scream from their mouths to get people excited.
A good example of this that I can use is the 2014 Winter Olympics. Countries that had never had snow there were confirmed by the media and reported that huge amounts of snow would fall. Reasonable economists crashed and burned as buildings started to go up.
And that’s the issue with the media. They tend to exaggerate tiny problems that exist in the property market. And they certainly do exist. In today’s world, buying a condo in Sweden is much more cost-effective. Economies usually do have certain exchanges that are relatively cheap. However, ensure that you don’t skip fundamental reports on the markets.
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This reply was modified 1 month ago by
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What specific economic indicators should I track to better understand the market?
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To better evaluate the housing market and the economy, you may consider monitoring the following economic indicators:
Housing Affordability Mean and Median Home Prices:
- Track changes in mean and median housing prices within your local area and country.
I recommend using the Case Shiller Home Price Mortgage Index to understand the economic indices affecting global markets thoroughly.
It is a strong indicator of home price movement in the US index cities:
- The index tracks home price changes in US cities over time and enables a thorough understanding of the economic index.
Sales Activity
Existing Home Sales:
- The total number of existing homes sold will help establish market activity.
New Home Sales:
- This is close to existing home sales but only addresses newly built houses.
Inventory Qualifiers
Months of Inventory:
- This assesses how many months it would take to sell all the available houses currently on the market and at what sales rate.
- Generally, low inventory months signify a seller’s market, while high months indicate a buyer’s market.
New Listings:
- Newly listed homes available for sale can signify activity and trends in the market.
Interest Rates
30-Year Fixed Rate Mortgage:
- The average cost of a mortgage interest rate influences housing affordability significantly and affects buy demand.
Mortgage Applications:
- The change in several mortgage applications indicates real estate activity since it is sensitive to market conditions.
People are losing homes to auctions.
Foreclosure and delinquency rates:
- These rates help monitor homeowners’ economic well-being by incorporating the number of homeowners who have missed out on making payments.
Economic Factors
- Unemployment Rate is a common measure of an economy’s well-being; sometimes, it’s a major barrier to buying homes.
Income Growth:
Increasing one’s income can mean more of the population can afford homes, thus increasing demand.
A brief explanation of the CCI index (Consumer Confidence Index)
Consumer Confidence:
- This indicator indicates how confident consumers are about the state of the economy, which affects their purchase decisions on items such as houses.
Housing Affordability Index
Metrics of affordability:
- Given their mortgage and income-paying capacity, this index displays whether a family earns enough money to rent or buy a house.
Construction Data
Building Permits:
- A consistent rise in Permits issued for new constructions forecasts their quantity in the housing market.
Housing Starts:
- This index determines the amount of residential housing under construction by builders.
Regional Economic Conditions
Local Job Growth:
- New job availability fuels new hopes and increases for housing.
Population Growth:
- Availability and access to housing have become more of a problem, often due to a rapidly rising population.
- When monitored regularly, these indicators will help evaluate the state of the real estate market and how it will perform in that economic setting.
If you’re looking to buy, sell, or invest in real estate, regularly checking these metrics will help you make the right decision.
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Which indicators are most important for predicting short-term market shifts?
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To attempt to estimate the near-term movements in the housing market, look for the following indicators:
Mortgage Rates
Effect on Costs:
- Variations in mortgage rates have a proportionate relationship to housing costs and buyers’ ability to make purchases.
- For instance, an immediate rise in the rates could suddenly nip a bull run in the market.
New and Existing Home Sales
Sales Patterns:
- A good number of existing and new home sales per month could indicate sudden activity in the market.
- An exceedingly noticeable decline in sales could indicate weak buyer interest.
Inventory Levels
Months Supply:
- Evidence shows that an exceptional rise in months of supply could mean a bigger buyer’s market.
- In contrast, a decline in inventory could mean a buyer’s market.
- This evidence includes the existence of pullbacks.
Foreclosure Rates
Preemptive Signal:
- Growing foreclosure rates may be viewed as an alert to the financial stress many homeowners may be experiencing.
- Using the stress to explain logical variations in low prices and high inventory potential.
Data for Mortgage Applications
The volume of Applications:
- A rise or decline in the volume of mortgage applications indicates buyers’ sentiments about the market’s state.
CCI (Consumer Confidence Index)
Hopes of an Average Buyer:
- Variable consumer confidence levels have been known to affect people’s actions in the market.
- Thus, there is evidence that mortgage activities could be affected, too.
- Even in the middle of the currency surge in the Tampa Bay market.
Data from Economics
Unemployment Rate:
- An uptick in unemployment claims could result in the decline of a region claimed to be an economic powerhouse.
Wage Growth:
- Changes in income levels on a short-run basis affect the purchasing abilities of consumers.
Local Market Conditions
Job Creation on a Regional Level:
- The performance of the local job market is a leading indicator of real estate demand in the short term and trends for the longer term.
Change in Demographics:
- The Population movement’s demographic trends could cause a sudden increase or decrease in the demand for housing.
By monitoring the above indicators, you can predict fluctuations in the housing market within a specified time frame. Such metrics can be helpful as they ensure an understanding of probable future changes in the market and thus enable rational decisions in real estate.
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Great summary of the week’s news wrapup.