We’ve addressed this topic before but since we’re in a shifting market and the 24-hour news cycle needs clicks-per-view, it’s worth repeating (especially as some of my favorite pet peeve headlines have cracked the news cycle). Sensational headlines grab user attention – skyrocketing mortgage rates, falling home prices, soaring foreclosure numbers. But for a reality check, let’s take a look at the current clickbait real estate headlines and separate the headlines from the real world.
The Real Estate Headline: Buy before the The FED’s raise rates again!
One of my biggest career annoyances is inaccurate information about how the Federal Reserve increasing interest rates affects long term mortgages. I’ve written blog post after blog post on this topic but it’s simply because I consistently see, read and hear how otherwise really good real estate agents that have been in the business a long time warning people that “rates are going to go up because the Fed is about to increase rates again.” The reality – at least where 30-year fixed mortgages are concerned – is that is often not quite the case. In fact, it’s often the opposite scenario – the Fed increases the short term rates, and long-term mortgage rates actually decrease.
“Just one day after the Federal Reserve raised its benchmark rate, mortgage rates took a sharp turn lower. The average rate on the popular 30-year fixed mortgage fell to 5.22% on Thursday from 5.54% on Wednesday, when the Fed announced its latest rate hike, according to Mortgage News Daily. The rate fell even further Friday to 5.13%.”
So agents and clients alike, please stop promoting that narrative. Yes, short term rates (aka adjustable rate mortgages) are going to go up, but the 30-year fixed mortgages often benefit from combating inflation. There’s a good case that mortgage rates may go down even further, although they’re unlikely to hit the amazing rates we had at the beginning of 2022 anytime soon.
The Real Estate Headline: Foreclosures Soar!
“The number of foreclosure starts — which is when the first public foreclosure notice happens — is up 219% since the start of the year, according to real estate data analytics firm ATTOM Data Solutions’ midyear 2022 U.S. foreclosure market report. What’s more, the number of properties that had foreclosure filings (this number includes foreclosure starts) is up 153% from the same time period in 2021. The number of foreclosure starts, California topped the list, followed by Florida, Tennessee, Illinois and Ohio.”
Yes, foreclosure levels are up, but they’re still below 2019 levels. In fact, experts say foreclosure activity is actually returning to what’s considered normal after an artificial depression by payment relief programs and foreclosure moratoriums spurred by the pandemic. If we look at this from a historical context, foreclosures can still be considered very low.
The Real Estate Headline: Inventory Soars!
The active listing housing inventory count on the FRED St. Louis Fed site shows an almost 50% increase in active listings from the low of March 2022, with 376,018 active listings up to 619,305 active listings the end of June 2022. It’s a number that’s likely increased even more by today’s date. It’s an impressive click bait headline to be sure, but the reality is that we’re historically very, very low on actual housing to meet long-term demand. As builders pull back and natural disasters continue to plague the country due to climate change, the pressure on housing and housing costs is real.
My point is simply this – attention-grabbing headlines are great, but take a minute to peel back the curtain and don’t stop at the headline and think you’re in the know. Discuss what is happening in the market with an agent you trust for their experienced interpretation. The reality often is 180 degrees apart from the sound bite.
Have a question about real estate you own, thinking of buying, or just watching the market? You know where to find me!