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You want to see a disaster? The Silent Recession in Real Estate

Look no further than the housing market and interest rates specifically. When rates started going up, Realtors, in an effort to keep sales up came up with a catchy phrase, “ Date the rate, Marry the house “. Meaning, buy the house with current high rates and then refi when rates come down. It’s been three years of high rates and , folks, it’s looking like high rates will continue no matter what the lying politicians promised you. Keeping rates this high for this long is cruel and unusual punishment for Buyers.

So “Date the Rate” can easily turn into “ Date the Bankruptcy and Marry the Eviction” all we need is widespread layoffs to start the collapse.

Mortgage rates are now at the highest since May 2024. 7.24% 30 year Fixed. Ouch! The 10 year Treasury yield as of yesterday, 4.75% and inching upwards. ( mortgage rates move with the 10 year yield. )

So, pretty much, mortgage rates have jumped since September when the Fed started cutting rates. WTF.

Existing home sales were crushed in 2024 at an average rate of 6.74% Imagine how bad its going to be with rates in the mid to high 7’s? I’m talking sales volume, prices are going to remain where they are. For prices to drop we need the job market to slow. Yesterday’s kaboom jobs report shows no signs of a slowdown.

Bottom line: If the job numbers are true these rates are staying up because Americans can afford it. Mortgage delinquencies remain at all time lows.

We are going to touch an 8 handle in rates in 2025.

Your local realtor and loan officer need a hug today.

Yesterdays shocking jobs report sent bonds into the tank

Bonds Tanking After Surge in Payroll Growth

11 comments

11 Comments

August West

Jan 12

Those jobs reports always get revised. At least once. You can’t trust this Admin to give you straight numbers….look at the “crime statistics”, utter joke.

I still don’t understand how the housing market is staying where it is, these rates are high, and banks are not loaning to anyone under 850 credit score.

I’ll tell ya, out here….and this is a bad sign, new construction is turning away from big homes, to small homes and multi family.

Texas, outside major downtown cities, don’t do apartments….until now.

Strange times. Things don’t add up.

I know we don’t agree on politics much, but I do like reading your financial stuff, especially the real estate side. Thanks for taking the time to post the info you do!

BigBallss

Jan 12

Replying to

Thanks for the kind words Augie. Me and you got into some real barn burners in the old days. We kicked each others ass like it was a bar fight, we used bottles, chairs and tables. 😂. The thing I always liked about you is after the fight we let it go. We didn’t start up the next day. Neither one of us whined like a bitch for years and years. Have a prosperous 2025. I’m going to try real hard to stfu about politics, in real life I rarely discuss politics with anyone.

I have read that Texas builders are focusing on smaller homes designed for first time homebuyers. There are some cracks in the Fla and Texas housing markets but no one is predicting a crash, more of a slowdown in the appreciation rate. Two things are happening that are surprising, the large cash down payments people are coming up with and the high credit and underwriting standards the lenders have maintained. In past times, when mortgage volumes slow down lenders drop their standards to maintain production volume, at Home Savings we called it feeding the monster. Without volume, lenders can’t survive. Interest rates staying high for yet another year is going to start taking a toll. To sound like a broken record, the key is employment. If we start seeing widespread layoffs, watch out.

August West

Jan 12

Replying to

Ha!

I’m Irish, brother…so I get hot fast, and cool just as. But I don’t hold grudges, it’s not healthy to harbor all that angst. Besides, I got other stuff to think about.

Yea, a lot of “lease” neighborhoods for huge manufacturing warehouses. That are being built. Lots of zero lot line shit.

We’ve had a bubble here for quite awhile, shit went up to high, too fast.

Back at you…best of luck this year.

MLK Blvd

Jan 11

a more somber take on the situation

https://www.cryptogon.com/?p=71789

Gary Ball

Jan 12

Replying to

If you want lower taxes? Leave CA for almost anywhere.

August West

Jan 12

Replying to

I live in Texas. Our property taxes are 2%+ essentially double of Kalif. But we have zero state taxes.

BigBallss

Jan 12

Replying to

And for Texas, it’s not just the 2%, its also the annual increases that keep pace with property values. That is no bueno for those with fixed income. Thank God for proposition 13 in California or we’d be screwed.