Hey it's Jennifer Lawhon with Lawhon Home Team and here with your real estate market update for June.
All right well it's all about mortgage rates. That's been the talk lately on the internet, on
the news, with clients. So let's jump right in and just start with mortgage rates. We have the chief
economist for Freddie Mac who says that, 'Mortgage rates continue to inch downward this week but are
still significantly higher than last year affecting affordability and purchase demand
heading into the summer. The potential homebuyer pool has shrunk, supply is on the rise and the
housing market is normalizing. This is welcome news following unprecedented market tightness over
the last couple of years. The economic uncertainty is what is causing mortgage rate volatility."
If you look at just a snapshot this is from June 2nd you've got your 30-year average was about 5.09
so just about 5.1 percent now the five-year arm adjusted rate mortgage was 4.04,
but that the arm is not always something that people want to get
it depends if it just suits your needs at the moment then that is a good mortgage to get.
Now let's look at mortgage rates. This is starting from December 30th of last year up till today.
You can see how we started at the end of last year so this is December 30th at a really good
interest rate of 3.11, but now you can see throughout the year how it's crept up. We
actually got up to 5.3 percent in may this was May 12th we've come down a little bit at about 5.09.
So you can kind of see we've got a steady
growth with the interest rate so far for the first half of the year.
Current mortgage rate compared to the last five decades so now let's look at this in
comparison because I know a lot of people think oh my gosh these mortgage rates are so high.If
you are a newer home buyer or a younger home buyer you might not have been around long
enough to see these fluctuations that have happened over the years
with mortgage rates. These are the last few decades if you look at 1980s they got up to almost
13 percent, 1990s you got the 2000s were over 6 percent, 2010's 4.09 and you can see the dotted
line kind of indicates where the current rate is overall historically these are still decent rates.
Now let's look at mortgage rate projections. If you've looked at the last few months of my
market updates you can see that it's been pretty fluctuating as far as what's going to happen
and obviously the economy makes a difference. Inflation makes a difference and so what's
going to happen is very hard to predict. So these are just current projections and you can
see that they're looking at staying at around 5.1 percent and hopefully not going up too much more.
But again it's all going to depend on what the feds also decide to do,
so we're watching that very carefully.
Here's a history looking back from 2016 you can kind of see how much the mortgage rates
have fluctuated. Obviously during the pandemic we saw historically low rates
and now we're getting up here and the orange is what's going to be projected.
What's good is they're not projecting anything too high right now and if you remember a couple of
market updates that I did I had mentioned how you want to actually keep an eye on the 10-year
treasury yield because look at this graph and I showed this kind of before
so in the blue is the 10-year treasury yield in the green is the 30-year market.
And what you have here the 30-year mortgage rate and so what you have is if you notice how the
10-year treasury yield right look at how in the last almost 50 years
the 30-year mortgage rate has moved pretty much in unison with the 10-year treasury yield.
So that is something you want to look at, The average spread between the two has been about 1.7.
Let's look further we're going to look up closer for the just this year so the first
half of the year, if you look here this is your treasury yield the 10-year treasury yield this
is your mortgage rates. We've got about a spread since well June 2nd of about 2.2
but again it seems to head with that so watch the 10-year treasury yield.
Now here's another question that we've had before: Are we in a housing market correction?
Well a correction is a "decline of 10 percent or greater in the price of a security asset
or financial market." So we're looking at home price forecasts if you look at those
you've got there's a few different they're actually not too far apart except the MBA,
but the average forecast is 8.9 percent so right now we're not even looking at a projected forecast
of a decline at all. So the housing market is at a turning point. Danielle Hale says that "We're
starting to see signs of a new direction, but the ball is still in the seller's court in most
housing markets ." Here's your showing times. It actually skyrocketed over the last two years.
Showing time is how many showings people have had in homes that are using the showing time app.
Here is your in the gray it's kind of like the pre-pandemic. Now during the pandemic and
then through 2021, 2022 we've had more showings actually than we did before.
Here's your pre-pandemic demand that's your black line we are well above that existing home sales.
You can see how many we've had since 2017 so 2017 to 2019 those were your typical real estate years.
We've actually seen more home sales in the last year.
Again the dotted line is your pre-pandemic sales so we're actually above that. Now
I know hard to believe. All right so what's ahead? Now we do not have a crystal ball. Nobody does.
We cannot say specifically precisely what's going to happen, but we can use some data to maybe help
us a little bit. So the chief economist of MBA says that "mortgage rates are likely to plateau
near current levels. The financial markets have attempted to price in the impact of fed
actions over this cycle and they are likely also pricing in the economic slowdown that will result
once we are past this rate spike. An associated volatility MBA expects that potential home buyers
may be more willing to re-enter the market." Well let's look at the 2022 total home sale forecast.
We've got Fannie Mup to Freddie Mac all within the six (this is in millions by the way). Slooking at
good projections for home sales and realtor.com says that "Experts don't believe the market is
in a bubble or a crash is in the cards like during the great recession. The nation is still suffering
from a housing shortage that has reached crisis proportions at a time when many millennials are
reaching the age when they start to consider home ownership. That's likely to keep prices high."
So what is a recession? The National Bureau of Economic Research defines a recession as
"A significant decline in economic activity spread across the economy lasting more than a few months.
Normally visible in real GTB sorry GDP real income employment industrial production and wholesale
retail sales." Recession also by the way does not equal a housing crisis. There are times when the
house price changes during the last six recessions there are times when the prices you can see have
actually stayed in the positive so it does not always mean it will be in the negative.
So we have a mortgage expert here that says " If you are looking to buy a home I would still
recommend you do so even at the higher interest rates because we have no reason to believe that
home prices will stop appreciating. Home values going up is only a problem when you're trying
to buy. When you own it's a gift." And that is so true. So let's jump into home sales. Now average
days on the market 17 days it's actually gone down I think a day since my last report a day or two.
Existing home sales now if you look in the grade that's 2020, the lighter blue is 2021,
the dark blue is 2022. So we have seen less existing sales this year compared to last year,
but still more than 2020. New home sales now if you notice in the dark blue there's also
been less new home sales than seen last year in 2021. So that part we have seen slow down
pending home sales. If you look at the black dotted line that's the historically healthy level
so as far as right now this starts at January 2021 up to January of 2022 we're still in the
healthy range though as far as pending home sales go. Percent of distress properties. I know I keep
showing this, but here's the updated one. We're still good, I mean we're still very low look at
this this is four percent in January 2020, but for the last year we're down at like one percent of
distressed sales. Which means foreclosures and short sales very good. What about home prices?
Well here's your sale price of existing homes. Overall the average in the U.S. almost 15 percent,
the South I always say we've been seeing very good numbers. You'll see that when I show the data for
Orlando specifically home price is still going up down here year over year the current has been 20.9
in a change over the last year positive. The forecast is 5.6 and if that does happen
that's good that just means a slowdown. Not a depreciation, but a slowdown with appreciation.
Housing inventory. Now this is last month's, remember I like to kind of show you
month to month. This is the data we had for last month for the seller traffic and this is the data
for this last one. We only had to convert to April that's all we could get right now,
but you can see some states have actually become stronger while other states have become weaker.
Year-over-year inventory levels. You can see from last May up to April we've been in a decline and
we know that's with the inventory there's been more demand that we have on the market.
New home inventory though has been in the positive which we've been talking about. They're still
doing really well. If you look at Athis year they actually had a bigger adjustment with
their inventory so even more now and then we have new home monthly inventory so dark blue is 2021,
light blue is 2022. Look at that from April we're seeing a good amount.
Now let's go to buyer demand. So there's been an unusual slowdown.
Michael Lane says that "April buyer activity was rather unusual since it typically matches
March levels, but this year April traffic was slower across all markets pointing to competition
softening. Icontrasts with last year's dynamic when demand reached a feverish peak in April."
So we have seen a slowdown from April. Now look at the, well let's talk about the buyer traffic. This
is from the last month's one. This is from what I showed you in the last report. Now let me click so
you can see the next how it's changed. There's been some weakening especially out in the west
with buyer traffic. Now A's been doing uh better it's at about a stable and then Arkansas look at
that that's doing really well. But it depends it keeps changing. Now let's end with our Orlando
market updates. Let's talk about sales. Now look at this for sales we were seeing a decline in
March and April which we just talked about nationally. Look at May. We actually saw
an increase last month in sales. And what about the home prices? What have we ? Well look at this,
we have not seen a decline at all with the average sale price here in Orlando.
If you notice here in May it's gone up even more. So the average sale price keeps going up here in
Orlando. So if you want to buy I would say buy now here and new home builders we've got time,
so if there's any new home builders you're interested in seeing you can let us know.
All right we still have our summer buyer seller guides they're free for you so you
can just visit our website at LawhonHomeTeam.com and fill out the contact us form and let us know
you would like us to send you a buyer and or seller guide. And if you have any questions
please feel free to use that number or again visit us at LawhonHomeTeam.com.
Look forward to seeing you guys next month!