All Forum Posts by: Alex Fenske

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. 

Great question and I actually do not know the answer! I know that with VA loans, the assuming borrower does not use their benefit as they don't even need to be a veteran. I'd suggest finding whatever letters/guides have been issued by HUD itself to see if you can find an answer on that, and if you do, please let us know.

 Thanks! As much as I stay on top of this stuff, I'm always surprised about at least one or two of the changes (or non-changes). The data so often refutes the story told in the broader media and people really make decisions based on those stories.

You're right about #s working now vs. later. I can't tell you how many times I'm talking people off the ledge who are being told "it's a bad time to buy." If you buy assets that are fundamentally sound today (i.e. sustainable cash flow, without speculation of future events), they can only ever get better. I have a few drop-third strikes that I bought during a plummeting market that now have 6 figures in equity and 4 figures raw monthly cash flow. Yes, I spent some years maintaining them seemingly for nothing, but had I not done bought them then, I could never just walk into metrics like those in an acquisition today. The best time to plant a tree was 20 years ago, the second best time is now.

Here's my monthly update through June! This is for the Midwest Real Estate Data/connectMLS coverage area of northeastern Illinois. Read below 

Supply – record lows
- There were 30% fewer homes listed this June compared to last, by far the fewest of any June on record.
- Number of homes for sale remained flat at its all-time record low, down over 36% from last June. The number of homes available usually grows by 20-30% from January to June, but this year it has actually decreased over that time.

Demand – down significantly
- Pending contracts are down 9% from last June, but surprisingly held their pace steady compared to April and May which is out of the ordinary; usually pending contracts dip after May.
- June closings were down 22% compared to last year, 35% compared to 2021.

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 over a year and a half since November 2021. (The major exceptions are select communities on Chicago’s South side, where in some areas supply is as high as 6 months or more.)
- Seasonally adjusted median days to contract stand at 10, keeping in the range of 8-10 days for two full years since July 2021.

Prices – flat
- Seasonally adjusted prices have remained flat for 11 months since August 2022, while prices versus the same month last year were up (1.6%) for the first time this year.

Mortgage rates – higher
- Today's (7/5/23) 30yr fixed averages 7.03%, surpassing the 7% threshold for just the fourth time in the past 12 months. FHA/VA loans are around 6.9%, closer to the 30yr fixed than they have been for some time. There is little discount for a 5/1 ARM (.09), and a .60 discount for a 15yr fixed.
- The Federal Reserve maintained the overnight borrowing rate at their June meeting as expected, the first “hold” since early 2022. However, they indicated after that meeting that they expect two more 0.25-increases this year, whereas previously the projection was virtually the opposite. Their next meeting is July 25-26.

What to do?
- Sellers: Short market times and ample demand are very real but prices are flat as a pancake. Price, prep and stage aggressively as you do need to compete on price.
- Buyers: Compete on all aspects (price, if you can, and terms), as multiple offer situations are back in style this spring with inventory woes only growing. Work with an agent who can help identify inventory prior to it hitting the market and/or work through alternative sale channels.

Hi everyone, here is the housing market update I publish for clients each month. As always, there are some interesting surprises! This is data for the Chicagoland metro area sourced from Midwest Real Estate Data LLC.

_______________________________________________________

Housing Affordability - down slightly

- The NAR nationwide housing affordability index fell by 5 points from February to March, dipping back below 100. The median income earner can no longer buy a median-priced home and spend 25% of their income on the principal & interest. This was thanks to larger increases in home prices and mortgage rates than in household income.
- The Midwest region’s index fell 10 points 133, still by far the most affordable in the nation.

Supply (New Listings and Homes for Sale) – down drastically
- There were 25% fewer homes listed this May compared to last, by far the fewest new listings in any May on record, including 2020.
- Homes for sale reached a fourth consecutive new all-time record low, down over 30% from last May.
- The only other time inventory has shrunk during spring was in 2020.

Demand (Pending Contracts and Closed Sales) – down significantly
- Pending contracts are down 15% and closed sales down almost 23% compared to last year.
- Demand is softer than at virtually any time in the past 10 years, but supply is still down more.

Supply/Demand Relationship – stable, seller’s market in MOST locations*
- Months supply still stands at 1.8 months, virtually unchanged since November 2021.
- Median days to contract stand at 10, steady in the range of 8-10 since July 2021.

Prices – flat
- Seasonally adjusted prices have remained flat for 10 months since August 2022, while prices vs the same month prior year were back to flat after being down by single digits for the last 5 months.

Mortgage rates – within “normal” range
- Today's (6/5/23) 30yr fixed averages 6.89%, a half-point higher than a month ago and towards the higher end of the range of the last 9 months. FHA/VA loans trending a hair above 6.5%. There is no discount for a 5/1 ARM, and a .60 discount for a 15yr fixed.
- The Federal Reserve meets next on June 13-14 and is expected to keep the overnight borrowing rate unchanged for the first time since early 2022. That should be the new norm as long as inflation and labor market tightness continue to ease.

What to do?
- Sellers: Short market times and ample demand are very real but prices are flat as a pancake. Price, prep and stage aggressively as you do need to compete on price.
- Buyers: Compete on all aspects (price, if you can, and terms), as multiple offer situations are back in style this spring with inventory woes only growing. Work with an agent who can help identify inventory prior to it hitting the market and/or work through alternative sale channels.

 I don't have a subscription to Crain's so I can't view. What's the summary? 

I was on one appointment this week where housing supply is shorter than 1 month with prices still rising, and another where supply is skyrocketing, currently at 8 months and prices falling. All within my market area of Chicago's south suburbs and south side. 

My personal investment goals this year are focused on flips due to some things I want to do financially. Taking the long-term view I'd rather keep (BRRRR) the projects I have going on right now, but this year my goals are different. Anyways, I wouldn't hesitate to buy rentals in areas with fair-to-better median incomes and school districts at this time.

 Absolutely, anything that makes financing stronger is better. Larger down payments, loan approval subject only to appraisal & title, lender calling the listing agent. Great point.

Hi everyone, here is the housing market update I publish for clients each months. As always, there are some interesting surprises! This is data for the Chicagoland metro area sourced from Midwest Real Estate Data LLC.

Housing Affordability

- The NAR nationwide housing affordability index held steady just above 100 through February, meaning the median income earner can again buy a median-priced home and spend just under 25% of their income on the principal & interest.

- The Midwest region’s index fell 5 points from 147 to 142 but is still by far the most affordable in the nation.

Supply – down drastically

- There were 33% fewer homes listed this April compared to last April, by far the fewest new listings in any April on record, fewer even than April 2020 during the initial COVID shutdown.

- Homes for sale reached a new all-time record low for the 3rd consecutive month, down nearly 28% from last April. For every 10 homes for sale in April 2019, there are only 3 today.

- The only time inventory has ever shrunk throughout the spring market was in 2020.

Demand – down significantly

- Compared to last April, pending contracts are down 18% and closed sales are down 31%. Demand is down a lot, but not enough to counteract the dropoff in new listings.

Supply/Demand Relationship – stable, seller’s market in MOST locations*

- Seasonally adjusted housing supply stands at 1.8 months, unchanged at 1.7-1.9 months since November 2021.

- Seasonally adjusted median days to contract rose a hair from 9 to 10, the first time reaching 10 days since August 2021.

Prices – stable to slightly down

- Seasonally adjusted prices have remained flat for 9 months since August 2022, while monthly home prices were slightly down (3.2%) compared to last April, the 5th consecutive month slightly off.

Mortgage rates – less volatile than recently

- Today's (5/4/23) 30yr fixed averages 6.49%, the same as a month ago though it has fluctuated since then. FHA/VA loans trending in the low-6s. There is no discount for a 5/1 ARM, and a .60 discount for a 15yr fixed.

- The Federal Reserve met yesterday and raised the overnight borrowing rate by 0.25 to 5.00-5.25%, its highest since 2007. They’re expected to pause increases through the end of the year, as long as inflation and labor market tightness moderate a bit.

What to do?

- Sellers: Short market times and ample demand are very real but prices are flat as a pancake. Pricing counts.

- Buyers: Compete on all aspects (price, if you can, and terms), as multiple offer situations are back in style this spring with inventory woes only growing. Work with an agent who can help identify pre-market and off-market inventory and work through alternative sale channels.

 Where are the homes? I'll do my best to get you a connection.

 I struck out - ended up with one lead on it and didn't get a return call. I did think of one more contact since then although it sounds like you don't need them after all. Bah.