Redfin- “Housing Market Activity is Plunging Further

And welcome back. Housing market activity in the US has plunged big time this fall. This, of course, is due to rising mortgage rates, which are above 7% at the time of this video here. So in today's video, I'm gonna share some early indications of home buying demand, and in general of the housing market as well, to give us some insights regarding where our housing market's headed in the weeks and months ahead. And I'm gonna be sharing the latest update from Redfin in today's video, and also, again, some early indications of home buying demand, of course, home selling interest as well here. I'm stumbling on my words here. Anyways, here's today's video. I wanna share with you guys, and this is a report from Redfin that was actually just reported yesterday at the time of this video, which is the 14th, the morning hours of the 14th here. Happy Friday, by the way, or happy Saturday, because you guys are probably watching this on Saturday. Anyways, and according to Redfin here, housing market activity is plunging further this fall than it did this summer as mortgage rates near 7%. Again, it depends on your source you're looking at, because if you look on the Morris News Daily, as well as Investopedia.com, they're reporting rates above 7%. But when you go on to Freddie Mac, for example, they're reporting rates below that, and more on that here in just a little bit. It says price drops have reached a new record high, and home sales and new listings are dropping. They go on to say here that the housing market is taking a second hit this month as increasing economic volatility and persistent inflation pile on top of 6.5% plus mortgage rates to further deter would-be home buyers and home sellers. Pending home sales, as well as new listings, both posted even bigger annual declines than we saw throughout the summer months when buyers and sellers initially reacted to rapidly rising rates. Rates rised to about 6.2% in mid-June of this year. We started the year at around 3.3%, so it didn't take long for rates to get above 7%. So that's kind of what they're talking about right here. Data on sales prices, which typically lags a couple months behind, is also weaker than it was this summer when the pandemic home-buying boom ended here. I'm actually really glad they mentioned this, because any data regarding houses that actually have sold is really an indication what our housing market was like about two months ago. So it's a lagging indicator. This, of course, would be meeting days in the market, meeting sold prices, and also any other data related to sold prices, such as the average sale price to list price ratio. And according to Redfin's deputy chief economist, Taylor Marr, he had this to say, "'Perspective' home buyers and sellers barely had time to get used to 5.5% mortgage rates over the summer months before they rose to nearly 7% this month." Again, it depends on the data you look at or the source you look at. Because if you look at Freddie Mac, for example, on Freddie Mac's website as of yesterday, which is the 13th, they're reporting that the average 30-year fix is 6.92%. As you guys may know, this is based on a weekly survey for average mortgage rates across the United States here. But we have a market where market's so volatile and also mortgage rates fluctuate so much on a daily basis, it really doesn't give us an indication regarding current rates right now, because this is really based on responses from lenders back on Monday and Tuesday of this week. And of course, today is Friday here, and they report this on every Thursday of each week. So when I look at average mortgage rates, I really don't look at Freddie Mac's website too much because rates have fluctuated so much on a weekly basis here. In any case, their chief economist had a really good quote here, because it says at 6.92%, this is reaching the highest level since April of 2002. And he says here, we continue to see a tale of two economies in the data. We have a strong job and wage growth. However, though, we have lingering inflation, recession fears, and housing affordability are driving housing demand down. The next several months will be no doubt more important for the economy and the housing market as well. So if you go into the Fed Rate Monitor tool, the next interest rate hike decision by the Fed is going to be on the 2nd of November. So by a probability of 96.4%, the street is forecasting that the Fed's gonna be increasing the federal funds rate to 4%. In other words, to increase the federal funds rate by 75 basis points. And now the street's forecasting for a 0% probability that the Fed's gonna increase rates by 100 basis points, and only a 3.6% probability that the Fed's gonna increase rates by 50 basis points. This is because the current federal funds rate is 3.25%. So if the Fed continues to raise rates by a high pace here, that's gonna contract our economy and also our housing market in the weeks and months ahead here. So have a look at this. Here's the 10-year U.S. Treasury note. Look at this, as of today, which is what, 2.08 p.m. Eastern Standard Time, the yield on that is 4.02%. Yesterday, which was on Thursday, we started the day at about 4%. This is because we had a hotter-than-expected CPI report for September that was released yesterday morning. But as of today, right now, the yield is actually over 4%, up by six basis points compared to yesterday. And because this is tied more directly to mortgage rates than really anything else, have a look at this, because according to Investopedia.com, as of today, the average 30-year fixed-rate mortgage for people with exceptional credit is 7.44%. And as I noted right here, when rates were averaging about 7.2% in the morning hours yesterday, that equated to an increase of $811 more per month to basically buy the median price home today versus one year ago. In other words, that's a 68% increase from one year ago. In other words, that's a 68% year-over-year increase in your average monthly mortgage payment. Obviously, the significance regarding this is that this is gonna impact home buying demand big time in the weeks and months ahead, given the fact that rates have increased so much. I mean, they started the year at 3.3%. On August 1st, we're at 5.05%. Now we're at approximately 7.5% right now. And going back to Redfin's report here, Taylor Moore went on to say the following here. The second sharp rate increase this year in rates, together with nerves about inflation and, of course, the direction of this economy here, is dragging down home sale activity further. And this is also pushing down home buyer sentiment down to a near all-time record low. And this is according to Fannie Mae. I actually just made a video about this a couple days ago. Fannie Mae just announced on the 7th of October that in September, only 19% of consumers indicated there was a good time to buy a house, down from 22% from the prior month. And this, by the way, at 19%, this is very close to an all-time record low. The all-time record low that we saw was actually in May of this year, when the share of people who had said it was a good time to buy a house was only 17%. And that's going back to Fannie Mae's data, which goes back to 2010, was only 17%. And that's data going back to the year of 2010. On top of that, sentiment regarding our housing market in general here has now fallen to its lowest level since October of 2011. And going back to Redford's report here again, he says we're also seeing homeowners who don't want to list their houses for sale when demand is weak, and also our housing market in general has been slowing down greatly here. And also, they don't want to give up their low mortgage rates. And this, of course, is exactly what I've been saying for months now, because a lot of people don't want to give up their historically low rates right now, given the fact that rates are above 7%. And the all-time record lows was set in January of 2021, and also more or less in August of 2021, when the average rate was about 2.7%. Okay, changing gears slightly, let's talk about some more early indications of home buying demand according to Redfin here. So according to Redfin here, fewer people are searching for homes for sale on Google, down 35% from one year ago. However, though, when you actually click on this link right here, it takes you to right here. This is Google Trends, and this is for people searching for homes for sale on Google. And this is my gripe regarding this link because they're sharing interest over time for homes for sale worldwide. But of course, we're only talking about the US housing market, so you actually have to change this to the United States only, though. When doing this, we're only looking at people searching for homes for sale in the US, which, of course, impacts our current housing market indirectly, maybe, right? Also, we want to change this as well to the past 12 months, to have a look at the interest over time for the search term in the US over the last 12 months. So one year ago, the interest for this search term was an index at 93. Now the index is at 71. In other words, searches for homes for sale in the US is down approximately 24% compared to the same time period in 2021. And then going back to Redfin's report here, obviously, this is much different than down by 35% that they were reporting. I'm guessing they're looking at worldwide searches for homes for sale and not in the US, which, in my opinion, is an error. Anyways, let's look at the Redfin Home Buying Demand Index, which, of course, is a measure of home tours and other home buying services by Redfin agents here. Down by 25% year over year, but up slightly from the prior four-week period. So here's a chart showing their index over the past few years. So the red line here is 2022, the green line's 2020, and the blue line above here is 2021. So we're down 25% compared to 2021, which is right here. Also well below 2020 levels as well. And as you guys can see right here, demand from Redfin agents really started to decrease greatly once we hit April of this year. And by the way, that was when average 30-year fixed rate mortgages were averaging or actually increased up to 5%. And ever since mid-April of this year, their index has been below last year's levels. And again, down by 25% right now compared to the same time period in 2021. And here's another early indication of home buying demand, and that's touring activity by real estate agents showing their home buyers' houses. As of October 9th, touring activity was down by 23% from the start of this year, compared to a 9% increase at the same time last year. And the numbers here are actually worse though when you go onto ShowingTime.com, which is this data that Redfin's sharing right now. When going onto ShowingTime.com, again, Redfin's reporting this number right here, down by 23% compared to an 8% gain we saw last year. But look at this. The most recent data we have is for the week ending October 13th, down by 24.3% from the same time period in January of this year, I should say. Also, compared to 2021, we were up by 7.6%. And also, as I mentioned in previous videos here, we've had fewer home showings across North America compared to the start of this year ever since the middle of July, which is kind of mind-blowing, right? We've had fewer home showings in mid-July until now compared to January 1st of this year. And January obviously tends to be a time in the market where our housing market's very, very slow. So it's very eye-opening to see that on August 1st, for example, we've had 6.8% fewer home showings compared to January 1st of this year. And now again, it's down by 24.3%, which is pretty eye-opening. One thing I also wanna mention though is that I would anticipate that this number here for 2022 to decrease in the months ahead. And this is because when you look at the past couple years, the number of home tours decrease in the winter months, especially around the holidays, because around Thanksgiving, the dip in home showings decreases greatly. Also around Christmastime, home showings decrease greatly as well. And because it's entirely normal for our housing market to slow down greatly during the holiday months, I anticipate this number here is going to continue to decrease in the months ahead. And going back to Redfin's report here, what we're also seeing right now is fewer people submitting loan applications for home purchases. And according to the Mortgage Bankers Association, mortgage applications for home purchases were down 2% week over week, and also down by 39% from the same time period one year ago for the week ending October 7th. And this is this report right here, which is a report that was just announced on the 12th of October here. I made a separate video regarding this here. Their purchase index down by 2% compared to the previous week, but again, down by 39% from one year ago. Take a look at this, because here's some notes I added for here. Because the number of purchase applications hasn't been this low since October of 2015. On top of that though, this dip by 39% on a year-over-year basis is the largest year-over-year decline in purchasing demand since September of 2010. In other words, we haven't seen a dip this big by 39% since September of 2010, which is pretty eye-opening. And also, I just noticed this, that the Morgues News Daily, as of today, just updated their average 30-year fix rate mortgages, or the average 30-year fix across the United States as of today, which is the 14th. They're reporting the average 30-year fix is 7.16%. Again, average rates for people with exceptional credit. One year ago, rates were at 3.14%, so an increase by 402 basis points, or 4.02 percentage points. In other words, a giant increase compared to one year ago, and current rates right now at 7.16%. The highest rates we've seen since approximately December 2001, which is absolutely insane, isn't that? The highest rates we've had since December of 2001, which should impact home buying demand greatly in the weeks and months ahead. And of course, I'll definitely keep you posted, so make sure you subscribe to this channel. Also, if you guys got any value out of this video whatsoever, then please hit the like button. I'd greatly appreciate that. Hope you guys have an awesome day. I look forward to seeing you on the next video. Whew, that was a big spider. Okay. Oh, that scared me. All right.