Epic Real Estate Investing - Incoming Real Estate Crash? What the Housing Market Data is REALLY Telling Us… | 1318

Episode Date: July 23, 2024

Wondering if the recent drop in mortgage rates signals an impending real estate crash or just a market correction? Join Matt from the Epic Real Estate Investing Show as he dives deep into the latest housing market trends and data from Redfin. Discover why home prices have hit a new high and what it means for homebuyers and investors. Learn about the current state of mortgage rates, inventory levels, and why the market isn't reacting as expected. Matt shares insights on whether now is the right time to buy or wait, backed by 14 years of experience in real estate investing. Don't miss out on these crucial updates that could change your investment strategy. #RealEstateCrash #HousingMarket #InvestingTips P.S. Whenever you're ready to go deeper and further with your real estate investing, looking into my partner program to help you get your first deal might be the move... take the first step here for free 👉 Here’s the deal, I’ll partner with you on your first real estate deal, and we’ll split the profits. It’s that simple. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-a.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. Is the recent drop in mortgage rates the sign home buyers have been waiting for? Or that a crash is imminent and everything possible is being done to avoid it. Well, that's what we're doing today. We're digging into the latest real estate market trends that could change everything for you. What you're looking at right here is the latest report from Redfin. Real estate prices, if you can see right there, have hit a new high again. Well, what's driving this?

And how long can this last? Matt here from the epic real estate investing show, by the way, the longest running real estate investing podcast on the interwebs like 14 years strong now. Thank you for your support over the years. I really appreciate it. And if you've been holding out for a better time to buy a home or pick up that next income property, you're going to want to listen up. Today's episode is just for you because I've got the scoop.

Mortgage rates have dipped recently, sparking a bit of hope. But guess what? They're still higher than they were a year ago and even six months ago. And you might think, I don't know, great time to buy. But the market's not reacting the way that you'd expect, at least not. Not yet. This past week, new pending home sales are significantly lower than last year at this time. People aren't jumping at these rates yet. Why is that? Well, it's probably because the drop in rates is, it's just too fresh. It's too new to show any real impact on home purchases. But if the rates

continue to fall or even stay stable in the mid 6% range, we might see a bump in demand later this summer. Nonetheless, we did hit all-time highs in the home sales price. You're looking at a five-year chart of the median sales price in the U.S. That's month over month. Home prices have gone up by approximately $3,000 since last month, year over year. They've increased by 4%. So that doesn't look like a crash, does it? And I can hear it in the comments already.

Yeah, but what? There's a huge crowd saying that the market crash is just around the corner. Now, I've been hearing this for, I don't know, three, four years now. And if you're in at camp, maybe look at the data yourself and take what you hear on YouTube with a grain of salt. I mean, for a housing market to crash, you need a bunch of houses on the market, and we don't have them, nor is there any indicator that they're coming anytime so. And then there's another crowd out there pointing to the surging inventory in Florida in Texas.

But prices, they're not dropping significantly. I'd say look at home prices today in Texas and Florida compared to 2020 pre-pandemic. They're higher. So does that really constitute a crash? And about listing prices dropping dramatically. Everybody's talking about that. Well, get to that next. it's this type of market awareness in challenging the mainstream narratives and the popular opinions

that enabled me to replace my day jobs income in four years. And if you'd like to discover the secret of how my private client Parker did it in 12 months by challenging this type of conventional wisdom too, I laid it all out in detail in my new book, Escape. If you grab a copy right now, I'll give you the course Robert Kiyosaki asked me to make for his rich dad community creative cash flow. That course, it's yours for free when you grab a copy of Escape at Myescapebook.com. So regarding this plunge in listing prices that everyone is talking about, everyone is all up in arms about, who cares? I mean, I could list my home for $100 million bucks and then just cut it to $50 million. And sure, it looks like a big drop like I cut my price

and a half. But is it a market crash? No, listing prices dropping, that doesn't matter to anyone but the sellers. What matters are the sales prices. And if sales prices aren't falling, they're at a new high, as I pointed out, you got to get real with yourself. remains very unfordable. That is real. That's the truth. But there are more than enough people who can afford what is available. That's the truth too. And so let's look at the inventory. It's on the rise. You know, we saw a 2.6% jump this week alone, adding up to 668,000 unsold single family homes. That's the biggest increase we've seen this year. But don't get too excited. It's still less than the big jump we saw in 2022. And why does this matter? Well, more inventory means more choices. But

it also signals slow buyer demand. Sellers, they're pulling back, too, with fewer new listings each week. And this keeps a lid on how much inventory can grow, even if demand stays low. But really, the big X factor, the one thing that's going to really move the needle in the housing market, are the interest rates. If the Federal Reserve doesn't change the Fed funds interest rate, mortgage rates will stay within a range. The range that we've been seeing at the bottom of this range is 6%. At the high is 8%, but realistically, we're probably between 6.5 and 7.5%. The 30-year fixed mortgage rate is now at right around 6.8%, I believe. We've been stuck in this range for over a year because the Fed hasn't changed the rate in over a year.

So the latest projection with the Fed is one interest rate cut this year, likely in September. It'll be a small cut, just 25 basis points, but they plan to continue cutting rates through 2025 and 2006. If Trump is reelected, you can assure that will be the case. So if you're looking to refinance your chance, it's coming to refinance. coming, but probably not until late 2025 for it to be worthwhile. For homebuyers and investors, mortgage rates, they might start drifting down before the Fed September meeting in anticipation of those cuts.

But by Q4 of this year, expect mortgage rates to stay in the 6% range. For first quarter of 2025, you can estimate those rates, I think, will be in the higher 5% range. I mean, improvements are coming, but they just may not be significant enough for recent home buyers to refinance just yet. So if you're looking to buy, you'll likely have to look off market for a real deal. But that's where all the real deals are anyway. But regardless of how you do buy, whether it is off market or on market, what's going to happen to the prices when the rates do eventually move downward?

The prices, they can only go up. So if you're thinking about buying or investing right now, and I think you should, and here's why, because the payments, they may be higher than you're comfortable with for a while. Certainly don't bite more than you can chew, right? You don't want to like over leverage yourself. You don't want to burden yourself with high payments. But if you can stand that discomfort for a bit, that might be worth it because the sales prices are likely as low as they'll be for a while or ever for all the reasons that we've discussed here in the recent years. So to give yourself a little bit more comfort with your investments like, hey, Matt, isn't that risky?

You're telling people to go ahead and take on payments they're uncomfortable with. Not necessarily. I mean, I don't want you to put yourself out. I don't want you to take food out of your kid's mouth or, you know, sector. sacrifice your own roof over your head, but you can make some moves where you can mitigate those risks significantly. And so to give yourself a little more comfort with your investments, you want to keep your eyes on where the people are going, because that's where you're going to be safe. Because real estate prices, they don't go up unless there's people there. And so you

want to look at where the people are going and that's where you're going to be safe, if not positioned to hit the jackpot. And right now, based on the migration chart, it's much easier really to see where not to invest than it is where to invest. You know, the rage has been Florida and Texas, that's where all the people have been moving. Well, Florida, it's cooling off a little bit. Texas seems to have stabilized. No one's leaving those two places, but the masses just aren't flocking to those locations like they had been in the past. But there are seven places that you probably want to avoid or at least sit on the sidelines and definitely watch because people are leaving these places. Number seven, Austin. Number six, Chicago. Number five, Washington, D.C.

number four, Seattle, number three, San Francisco, number two, New York City, and number one, everybody, together, say it with me, Los Angeles. Now, if you look at all those cities, what do they all have in common? Well, I'll let you answer that. I know some people are rooting for something dramatic to happen, but it's improbable this year. With only five months left in 2024, dramatic changes are unlikely. All righty, so this has been your realistic and honest housing market update. Please subscribe to stay in the know, and thanks for the continued support. See you next time. Take care. And that wraps up the epic show.

If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them. And ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings and success to you. I'm Matt Terrio. Living the dream.

Yeah, yeah, we got the cash flow. You didn't know home world. We got the cash flow. This podcast. is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.