All Forum Posts by: Alex Fenske

I'm starting to hear more chatter about this mysterious "wave of foreclosures" that was a frequent claim/projection back in 2021, which didn't happen then, and by all indications is not going to happen now.

The first graph below from the St. Louis Fed shows the delinquency rate on residential single-family mortgages, and proves there's a way to spin this data to show that delinquencies are increasing rapidly. But when I share that the low point on that visual is 1.700% of mortgages, and the high point is 1.730%, maybe the context makes a difference.

Speaking of context, consider the second picture showing the delinquency rate over the past 33 years. You'll then see that delinquency rates are:
- At their lowest point since 2006
- Historically on the low side of normal
- On an overall downward trend for the past 4 years

In fact, excluding the artificially propped-up mortgage market of 2004-2006 during which delinquency rates were slightly lower than they are today, bottoming out at 1.41% in 2005, there are fewer mortgage delinquencies today than at any time in the past 33 years.

By the way, when these scant 1.73% of homeowners become delinquent on their mortgages, they overwhelmingly have the equity to be able to sell the home at a gain if needed. Per CoreLogic, only 1.8% of all mortgaged homes are in a negative equity position, and the average homeowner across the US has $311,000 in equity.

If anyone has contradictory data, please share. Otherwise I'm (again) declaring this theory way off.

 Thanks for sharing this!

I didn't know there was a QBO app so that's definitely something for me to look into. Great suggestion!

For those who manage 3+ flips at a time, I'm curious what bookkeeping software you use and how you keep all the expenses properly matched to each property. 

I use QBO for my corp books and Stessa for my rental portfolio, and I have a bookkeeper who manages those systems. We used Stessa for the flips last year, but as I've increased the number of flips, tying expenses to the appropriate project has become a bear and I'm wondering what others do. Contractor payments, online orders, card swipes at home improvement stores, utility payments... When these payees are shared across all projects, it's a mess tracking what expense goes to which property.

What's the simplest/easiest way to do this?

November 2023 Housing Market Update: No inventory growth in sight despite high mortgage rates
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Supply – record lows and falling
- There were 10% fewer homes listed this October compared to last, the fewest in any October on record.
- There are 27% fewer homes for sale than there were last October.
- Fun fact: In no month this year has inventory crossed above 18,000 homes, but prior to this year, there were only 3 months where inventory was ever below 18,000 homes – all in 2021, of course.

Demand – downward trend may be ending?
- Pending contracts were down only 2% from last October. This trend appears to mark the end of demand’s 2-year freefall.
- October closings were down 22% compared to last year. Declines in closed sales have not tapered off yet, but based on contract activity, I expect to see this closed sales flatten out soon.

Supply/Demand Relationship – seemingly perpetual seller’s market
- Seasonally adjusted housing supply still stands at 1.8 months, unchanged for two full years since November 2021.
- Seasonally adjusted median days to contract fell to 9, virtually unchanged since July 2021.

Prices – rising again
- October was the second consecutive month of seasonally adjusted price appreciation, with prices rising by 1.7% compared to the prior 12 months.
- October prices were up 7.3% compared to last October, the third consecutive month of 7% growth.

Mortgage rates – highest reported in 20+ years
- Today’s (11/7/23) 30yr fixed averages 7.46% after peaking over 8% for the first time since October 2000 and then dropping a half-point in the past 7 days. Again, we note that prices are coming back 7% over last year at the same time mortgage rates are the highest they’ve been in over 20 years.
- FHA/VA loans are way lower, 6.82% as is the 15yr fixed. ARMs are priced out of the game.
- Last week the Federal Reserve voted to keep the bank overnight borrowing rate steady at 5.25-5.5%, rather than raise it, in light of encouraging inflation news. They meet again in December and are not discussing any potential for decreases, only holding steady or increasing.

What to do?
- Sellers: Low supply persists and it’s perking up prices, now 3 months in a row. I still recommend pricing against active listings more than closed sales, especially with seasonality in effect.
- Buyers: I’m confident in stating that you will find a home bought today is more affordable than a home bought tomorrow. Make your move!

Here's my monthly market update - sorry I'm a bit late posting this one as we're already nearly half-way through September! 

Supply – record lows, contradicting seasonal norms

- There were 15% fewer homes listed this August compared to last, the fewest in any August on record.

- The number of homes for sale remained roughly flat from July, down 33% compared to last August and still hovering around record lows. There are fewer homes for sale than there were in January, when normally there are 20-40% more homes for sale in August vs. January.

Demand – still soft, but moderating

- Pending contracts are down 7.6% from last August, still consistently down year-over-year but beginning to flatten out at 2013 levels.

- August closings were down 14% compared to last year, less of a year-over-year drop than last month which may indicate the early stage of a flattening in this metric too.

Supply/Demand Relationship – stable, seller’s market

- Seasonally adjusted housing supply still stands at 1.8 months, virtually unchanged since November 2021. The longest supply I could find in any individual MLS area was 5.2 months, meaning all areas are in a seller's market.

- Seasonally adjusted median days to contract remain at 10, steady since July 2021.

Prices – flat, possibly trending back upward

- August median sale price was up 7.6% compared to august 2022, the third consecutive month-over-month increase after 6+ months of slight decreases, and the largest increase in this trend.

- Seasonally adjusted prices are still flat, as they have been since August 2022, but with three consecutive month-over-month increases we may see the longer-term trend turn back up.

Mortgage rates – higher

- Today's (9/6/23) 30yr fixed averages 7.21% after briefly spiking to 7.49% in late August. Aside from that spike, rates have been somewhat stable in the low-7s for the past 90 days. FHA/VA loans are nearly a half-point lower, around 6.8%. There 5/1 ARM averages 7.0%, with the 15yr fixed around 6.6%.

- Multiple Federal Reserve members have indicated they plan to hold the Federal Funds target rate at its current level (5.25-5.5%) at their meeting September 19-20. Inflation is reading 4.2% and wage growth is moderating, so the Fed is expected to “hold” for now but will institute another increase in November if any of those trends reverse.

What to do?

- Sellers: The advantage is still yours, but pricing is flat. Price, prep and stage aggressively as you do need to compete on price.

- Buyers: I’ve been repeating myself for 2 years about the unlikelihood of housing affordability improving in the near-term. Now, despite mortgage rates persisting above 7%, prices are actually showing signs of increasing. The fundamental drivers of supply and demand still indicate that buying sooner will almost certainly be more affordably than waiting.

Welcome, David!

 Chicago Southland Homes is my team/brand, but the information covered is for the entirety of the Midwest Real Estate Data service area.

More records set while certain metrics haven't changed in two years!

Supply – record lows, contradicting seasonal norms
- There were 26% fewer homes listed this July compared to last, by far the fewest of any July on record.
- The number of homes for sale remained roughly flat at its all-time record low, down 39% compared to last July and down even compared to June, which is abnormal.

Demand – still softening, but moderating
- Pending contracts are down only 3.2% from last July, the smallest decrease in this figure in quite some time. Pending contracts have been on a steady decline since May 2021, but after the last 3 months it appears to be flattening out – albeit at 2013 levels.
- July closings were down 24% compared to last year. I expect this metric will begin to flatten out soon because it trails Pending Contracts.

Supply/Demand Relationship – stable, seller’s market in MOST locations
- Seasonally adjusted housing supply still stands at 1.8 months, unchanged at 1.7-1.9 months for nearly two years, since November 2021.
- Some – but not all – areas that saw supply as high as 6-9 months (certain communities on Chicago’s South side) are back down under 6 and trending downward.
- Seasonally adjusted median days to contract remain at 10, steady between 8-10 days since July 2021.

Prices – flat
- July median sale price was up 4.3% compared to July 2022, the second consecutive month-over-month increase after 6+ months of slight decreases.
- Seasonally adjusted prices are still flat, as they have been since August 2022.

Mortgage rates – higher
- Today's (8/2/23) 30yr fixed averages 7.13% and has hovered just above or below 7% for the past 60 days. FHA/VA loans are around 6.8. There 5/1 ARM gets you a paltry discount of 0.18, and a 15yr fixed gets a 0.65 discount.
- The Federal Reserve increased the overnight borrowing rate by 0.25 at their July meeting as expected, bringing it to its highest level (5.25-5.5) since 2001. Markets are split on whether there will be further increases this year. After peaking a year ago at over 9%, inflation is down to 3%. The job market is still tight.

What to do (besides contact us for personalized advice)?
- Sellers: The advantage is still yours, but pricing is flat. Price carefully and you'll still sell quickly.
- Buyers: Tough love moment. If you’re waiting for affordability to improve by any significant amount, you might die holding your breath. Interest rates will continue to fluctuate and, yes, will at times be lower than today. But there is so little inventory and enough pent-up demand that any dips in interest rates will add fuel (more buyers) to the fire. Major change will need to take place to drastically increase the number of people selling their homes, and there’s no sign of what (or when) that might be.

Agree! Planning to refinance to a lower rate in the future IF AVAILABLE is great. Using that possibility as a pry bar to make a deal looks like it works is a setup for failure. 

I use InfoSparks for local market data and Mortgage News Daily for mortgage rate data. When needed for other metrics not available there, I also like the St. Louis Fed.