The MartiniFactor | last week and this week with real estate and mortgage rates | April 29, 2022 Edition

April 25, 2022 by Kevin Martini

The MartiniFactor is produced by Raleigh Mortgage Broker Kevin Martini and it provides a glimpse of what happened last week in real estate and in the mortgage arena. In addition, it shares thoughts on what to keep on the radar for the week ahead.

Last week (4/22/2022) & this week (4/29/2022)

LAST WEEK IN THE REAL ESTATE & MORTAGE MARKETS

Last week we saw data relating to home sales; Month-Over-Month existing Home Sales were down 2.7% and Year-Over-Year Existing Home Sales were down 4.7%. This is the second month of decline for this metric however as you read this headline number, there may be concern however in you consider the current housing inventory and mortgage rates, the number was pretty good! Inventory is down 9.5% Year-Over-Year and mortgage rates have moved 1% plus in 2022. On the aggregate, the headline number does not tell the complete story considering the external factors (e.g. inventory & mortgage rates).

Some important numbers from last week:

The median home price was reported at $357,300, which is up 15% year over year. It is important to note, median home price is NOT the same as appreciation and ‘median’ is defined as the middle number is a sorted list of numbers. When there is a mix of sales prices, this number is distorted.

THIS WEEK IN THE REAL ESTATE & MORTAGE MARKETS

The big news this week that could disrupt markets will likely come from the G20 Meeting. Fed Chair Jerome Powell is scheduled to speak, and U.S. Treasury Secretary Janet Yellen is expected to attend the G20.

More news on the health of housing this week as the Case-Shiller Home Price Index , Federal Housing Finance Agency (FHFA) House Price Index. And Pending Home Sales data is released.

This week there will be an estimate for the 1^st Quarter GDP along with critical inflation data which will be reported via Personal Consumption Expenditures index. Remember that Raleigh mortgage rates live in the bond market and the nemesis to bonds is inflation because inflation erodes the yield of a bond – the result is higher inflation means higher home loan rates.

THE MARTINI MORTGAGE GROUP BOTTOM LINE

Be prepared for more volatility and remember, right now, real estate and the current mortgage rate environment remains an opportunity. The Martini Mortgage Group is here to talk about what you have just read and here to help you on the path to buying you home. Contact the Martini Mortgage Group by dialing (919) 238-4934.

If not now in Raleigh, it could really cost you!

April 25, 2022 by Kevin Martini

Many people are curious what will happen to home values over the next few years. Some renters think they need to keep renting and some homeowners think they should stay stay in the house they now own even though it does not meet their current or future needs because of fear of a real estate shift. Oh by the way, shift is a euphemism for real estate bubble. SPOILER ALERT – there we are not in a a real estate bubble zone, we are in a real estate opportunity zone!

In this special episode of the Martini Mortgage Podcast called, if not now, it could really cost you; Certified Mortgage Advisor Kevin Martini breaks down the economics based on what a dynamic group of 100+ economists, housing market analyst and investment strategists are predicting for the next 5-years.

Martini Mortgage Podcast | Episode 140 | If not now, it could really cost you!

Right now, that means today we are living in the good old days of real estate. What do I mean by that? Simply put, if you fast forward 5-years or 15-years and you look at today, you will say one of two things…you will either say, I am so thankful that I purchased real estate in 2022 or you will say I wish I had purchased real estate in 2022, it truly was the good old days of real estate back then.
Kevin Martini – Certified Mortgage Advisor & Raleigh Mortgage Broker

Home Price Expectation Survey

Martini Mortgage Podcast Transcript of Episode 140

martini mortgage podcast raleigh mortgage lender kevin martini

If not now, it could really cost you! When I say now, I mean right now and when I say it could cost you, I mean it could cost you tens of thousands of dollars. In fact, according to the Home Price Expectation Survey it could cost you $32,400 in 2022 and by the end of 2027, it could cost you $96,343 in appreciation alone. Then there are rising mortgage rates. Let me share this hashtag Kevin Martini Live nugget about mortgage rates. When mortgage rates rise by just one-percent than your buying power is reduced by over 10%.

Welcome to episode 140 of the Martini Mortgage Podcast, my name is Kevin Martini and I am a Certified Mortgage Advisor with the Martini Mortgage Group which is located in Raleigh, North Carolina however myself along with my very talented crew help families in all 100 counties of North Carolina and pretty much in ever state in the U.S. too. I am calling this special episode of the Martini Mortgage Podcast; If not now, it could really cost you!

Right now, that means today we are living in the good old days of real estate. What do I mean by that? Simply put, if you fast forward 5-years or 15-years and you look at today, you will say one of two things…you will either say, I am so thankful that I purchased real estate in 2022 or you will say I wish I had purchased real estate in 2022, it truly was the good old days of real estate back then.

Let us talk about where real estate is going in light of higher mortgage rates appearing in 2022. Wait! Yes, mortgage rates are higher today than they have been in the last couple of years however from a historical standard, they are historically low. Bold statement, not really — check this out. If you looked at historical 30-year fixed mortgage rates since 1971 the average rate is pretty darn close to 8 percent. Again, from a historical standard, mortgage rates are cheap but they will not be forever.

Now to me, it is not what one person opinion is that matters. Opinions are like belly buttons, everyone has one. I like to look at a sampling of what many experts think when I look at the future of real estate values and the Home Price Expectation Survey that is performed by Pulesnomics is in my opinion the most accurate predictor future of home value. You see the Home Price Expectation Survey is not just what one person thinks, it is a survey of 100+ real estate market experts, economists and investment strategists.

The forecast in the most recent Home Price Expectation Survey highlights that home prices will continue to appreciate over the next 5-years. In 2022, the see a deceleration of appreciation and in 2023 through a stabilization of home values to more traditional levels.

I want to be crystal clear, deceleration of home values does not mean that home values are going to depreciate. Nor does deceleration of home values means that there is a real estate bubble that is going to burst like they did 15-years ago during the great recession. Also while I am setting the official record straight, let me properly communicate, for the people in the back, recession does not mean housing bubble nor does recession means a depreciation of home values.

Let me share a Kevin Martini story with you. Let us assume you are on Interstate 40 leaving Raleigh and going East towards Wilmington. The speed limit is 65 however you are going 85 miles per hour and in the distance you see a police car…you decelerate and take your speed to the posted speed limit of 65. You pass the police car and there are no blue lights flashing in your rearview mirror.

Sure you are now going 20 miles per hour slower however your are still going the speed limit. It is my opinion that this is what real estate is going to do int he coming years — it is going to decelerate not depreciate. Yes the two words sound alike but they have materially different meaning.

The Home Price Expectation Survey is predicting a a 9% increase in home values in 2022. According the Federal Housing Finance Agency the year of year appreciation in 2021 was 18.8%. The S&P Case-Shiller was up 18.6% so yes, a 9% predication is deceleration but it is still above the historical average and that means we are still speeding.

Don’t believe me that we will still be speeding in 2022? Let me share that the Martini Mortgage Group is located in Raleigh, North Carolina. Raleigh, North Carolina is located in Wake County and the 63-year average yearly home appreciation rate 3.41% for Wake County, North Carolina.

The Home Price Expectation Survey says that in Raleigh, North Carolina and specifically Wake County, North Carolina we will keep speeding in 2023 with a forecasted home appreciation rate of 4.74% and in 2024 the appreciation rates hold be 3.67% and in 2025, we will be at the current 63-year average in Wake County with 3.41% and then in 2026, 3.57% appreciation.

Holy cow that was a lot of numbers, what does it all mean? For illustration, let us assume that you purchased a $360,000 home in January 2022. According to the predications in the Home Price Expectation Survey by the end of 2023 that home will be worth 392,400 and in 2024 it will be worth $411,000 well let me fast forward to the end of 2026, that home would be worth $456,343.

The very distinguished panel that is survey for the Home Price Expectation Survey is stating that you could have a potential growth in household wealth over the next 5-year of $96,343 solely on increased home equity.

I said it earlier during the episode of the Martini Mortgage Podcast, we are living in the good old days of real estate and if not now, it could really cost you!

In closing, there is nothing wrong with renting and there is a time to rent however, in my opinion, that time is not now. I want to be clear, renting may be the right thing for you and your family but I truly believe, with an open heart, you need confirmation that homeownership is not right for you and your family. Right now is the time to explore your homeownership option based on facts not based on what you heard at a barbecue a couple of years ago.

If you want or need mortgage help to explore you homeownership options as a first time home buyer or as a repeat home buyer … know that we are here to help, just give us a jingle at 919.238.4934.

Again, my name is Kevin Martini and I am a Certified Mortgage Advisor with the Martini Mortgage Group which is located in Raleigh, North Carolina however I help families all over the U.S.. If you are buying a home and need a home loan, know that I provide trusted advice with a frictionless process that offers great rates and certainty to you and your family. Real estate transactions need to always close on-time and need to be stress-free and should be a world-class experience for everyone involved.

Stay safe out there and wishing you peace and blessings.

Now it is time for the disclaimer:

This material has been prepared for marketing purposes only. This is not a loan commitment or guarantee of any kind. Loan approval and rate are dependent upon borrower credit, collateral, financial history, and program availability at time of origination. Rates and terms are subject to change without notice. The Martini Mortgage Group at PCL Financial is a division of Celebrity Home Loans, NMLS # 227765 with a Branch address of 507 N Blount St Raleigh, North Carolina 27604. You can contract Certified Mortgage Advisor and Producing Branch Manager, Kevin Martini NMLS# 143962 by calling the Branch and that number is 919.238.4934. For a full list and more licensing information please visit: www.NMLSConsumerAccess.org or by visiting www.MartiniMortgageGroup.com – Equal Housing Lender

Rising Raleigh mortgage rates impact on home prices

April 12, 2022 by Kevin Martini

During the first quarter of 2022 the average principal and interest payment on a $100,000 home loan went up by about $100 courtesy of rise in Raleigh home loan rates. It is expected that Raleigh mortgage rates will continue to rise in 2022 and what will the impact of higher mortgage rates be on home values in the Triangle of North Carolina?

In this special episode of the Martini Mortgage Podcast, episode 138, Certified Mortgage Advisor Kevin Martini, unpacks the data on the impact of rising mortgage rates on the housing market (e.g. appreciation and sales).

There are 6 times in recent history where mortgage rates moved more than 1%. The average increase in home loan rates during those 6 periods of time was 1.46% and the average home price increase was 8%. Historically speaking, rising home loan rates has a positive impact on home prices.
Raleigh Mortgage Lender & Certified Mortgage Advisor Kevin Martini

As discussed in episode 138 of the Martini Mortgage Podcast

changes in home values when mortgage rates rise more than 1 martini mortgage group.001

Transcript of episode 138 of the Martini Mortgage Podcast with Kevin Martini

rising mortgage rates impact on housing martini mortgage podcast

There is no question that mortgage rates today are higher than they we last week, last month or even last quarter and even last year or the year before that. In 2022, there has been an acceleration of mortgage rates, when I say acceleration, 2022 started basically right at 3% and today mortgage rates are basically at 5%. The first quarter of 2022 is not the first time that there was a significant increase in mortgage rates. How are these rising mortgage rates going to impact the housing market?

Welcome to episode 138 of the Martini Mortgage Podcast, my name is Kevin Martini, and I am a Certified Mortgage Advisor with the Martini Mortgage Group which is located in Raleigh, North Carolina however I help families in all 100 counties of North Carolina and pretty much in every state in the U.S. too. I am calling this special episode, rising mortgage rates impact on housing.

Freddie Mac publishes the Primary Mortgage Market Survey every week and they have done this since 1971. At the end of December of 2021, the 30-year fixed mortgage per their lender survey was at 3.11%. On March 31, 2022, their lender survey was at 4.67%. In the first quarter of 2022, the 30-year fixed mortgage rate increased 1.5%.

Let me get granular what that this means. The average principal and interest payment on a 30-year fixed mortgage has increased about $100.00 dollars a month per $100,000 borrowed in the first quarter of 2022. WOW, that means a $300,000 mortgage would have had a $300 a month increase in payment in the first quarter. I can understand how one would think that this rise of mortgage rates is going to impact housing negatively but is it? Will this rise in home loan rates means decline in home values in the future? Will mortgage rates keep rising at this pace? And what does it mean for housing? All great questions.

Let me tackle the future of mortgage rates. It is my opinion and the opinion of many industry experts that home loan rates will move even higher during 2022. I feel the rate of increase, no pun intended, will not be as aggressive as it has been however there are so many external factors influencing the markets that could negate that statement, specifically the Federal Reserve unwinding their balance sheet of 2.7 trillion in mortgage bonds.

You see, mortgage rates live in the Bond market as a Mortgage Backed Security. When Bond prices rise, yield is lowered and when yield is lower than mortgage rates are lower. Now when Bond prices are lower, yield rises to attract more investors. When yield rises so does home loan rates in Raleigh, North Carolina and in every state in the U.S.

The Federal Reserve purchase of these 2.9 trillion dollars of mortgage bonds started in March of 2020, and these purchases continued during the evil pandemic and this caused historic mortgage rates. It is not if the Fed will sell, it is when Fed will sell these Bonds. When they do, buckle up. The Federal Reserve decision on short term interest rates really doesn’t impact mortgage rates in the short term but in the long term, their control of short-term rates could temper inflation and when inflation is under control that is good for mortgage rates.

WOW! I went on a rant for a moment there, let me get back to the impact on rising rates on home prices. There are 6 times in recent history where mortgage rates moved more than 1%. The average increase in home loan rates during those 6 periods of time was 1.46% and the average home price increase was 8%. Historically speaking, rising home loan rates has a positive impact on home prices.

Let me break down the periods of time. Period number 1 started in October 1993 and ended in December 1994…during those 14-months the mortgage rate increased 2.38% and during that same period home prices went up 3%.

Period number 2 started in January 1996 and ended in September 1996…during those 8 months rates increased 1.2% and home prices went up 2%.

Period number 3 started in October 1998 and went on for 19 months so ending in May 2000. Home values went up 13%.

Period 4 started In June 2022 and went on for a year. Mortgage rates increased 1.06% and home values went up 13%.

Period 5 started in June of 2005 and ended in July 2006…during those 13-months, home loan rates increased 1.18% and home values went up 7%.

And in the 6^th period which started in November 2012 and ended in December 2013 which was 13-months, mortgage rates increased 1.11% and home prices went up 11%.

Let me say it again, recent history has shown an increase in home values when home loan rates have increased more than 1%. I believe this recent move in home loan rates in 2022 will yield an unprecedented historic increase in home prices not just because the increase in mortgage rates but in addition to the fact we have today, low inventory levels of homes for sale. When you see headlines that say home sales are down that is because there are not enough roofs available for sale not because there is not a lot of people that need and want roof.

Let me share a Kevin Martini audio nugget with you. 2021 will go down as one of the best years in real estate history. Many people made more money with their home than they did at their job in 2021. Will 2022 be a rinse and repeat of 2021? I think so!

With that said, I do not think that home sales will be as high as they were in the past and that is not because of the lack of demand, it will be because of the lack of supply. I do believe that home appreciation will continue in 2022 and for many years to come but not at the level they had in 2021.

Let me say what I said in a different way so there is no misunderstanding. Home values are forecasted to appreciate this year and beyond for that matter in the 5-year forecast. In the April 2022 Raleigh Real Estate Report Card, it highlights that the median home price in Raleigh, North Carolina today is $395,673 and in 60-months that median priced home is expected to be over 24% higher which put sits value at $491,343. So, getting micro with the Raleigh, North Carolina real estate market, homes are expected to appreciate over 9% in 2022. Last year, in North Carolina, homes appreciated north of 21%. 2022 may not be as strong in appreciation as it was in 2021 but it is still going to be strong.

Real estate today represents a rare opportunity, and it is never to soon or too late to explore your options. You have not missed out, but you need to take steps pretty darn soon to take advantage because home values are headed upwards and so are mortgage rates.

If you have questions about what you have heard in this episode of the Martini Mortgage Podcast, I am here. If you want trusted advice with a digital mortgage process that offer a great rate with certainty check out my website by going to: www.MartiniMortgageGroup.com – you can find some real world information there and you can also securely apply online or book an appointment with me. Be sure to check out the April 2022 Raleigh Real Estate Report Card which can be found in the learning center.

Thank you for tuning in and thank you in advance for sharing this episode with someone you care about that could benefit. My name is Kevin Martini and this was episode 138 which has been called; ‘Rising mortgage rates impact on housing.”