Mortgage and Real Estate are ALREADY flexing on 2024

You probably didn’t hear that refinance applications went on an absolute tear last week did you? Well, they did. Applications to refinance a home loan jumped 19% from the previous week and were 30% higher than the same week one year ago. Yup, 30% higher than the same week in 2023…and that’s not even when rates hit their peak in 2023. To me this suggests 2 things: 1) That people have warmed up to the market rates being the market rates so if you wanna access home equity you’re gonna have to take the rate that’s offered; and 2) Homeowners are likely refinancing because the HAVE too, not because they WANT to. Whether it’s cash out to pay off debt, build an ADU, or finance some other ambition…refinances are here!

And next lets talk about home prices. Sorry internet trolls, but home prices are already on the rise as we can see from the 2023 year end data. Fueled by that darn decline in mortgage rates, national home prices ROSE 5.2% during the month of November. Clearly demand for housing is there, and even if you wanna make the argument about inventory keeping prices high, you still have to have an answer for why buyer behavior has them willing to pay more than they might have just a few months prior. Yes, math and the ability to even qualify plays a part here, but what we’re really seeing is EXACTLY WHAT WE WERE TALKING ABOUT – If the Fed is actually finished raising rates, and signals cuts in 2024 then mortgage market see rates would start declining, buyers will come off the fence and that demand will keep prices high, or push them even higher.

And speaking of home prices, lets talk about the percentage of homes sold that have price cuts as part of their story. If you didn’t know a “normal” range for percentage of listings that experience a price cut is 30-35%. So 2023’s 36.5% of homes experiencing a price cut isn’t all that bad even though it falls just outside the range of normal. But we have to remember, this includes all that time when mortgage rates were their highest in 22 year and prices STILL didn’t make this reading rocket into outer space. So what’s that mean for 2024?….Less homes experiencing price cuts. With mortgage rates easing up, and inventory thawing out, the demand still exceeds the supply and the projected percentage of homes to experience a rate cut this year is only 32%. That’s a lot of margin for error in case that turns out to be wrong, and still within the rage of what we traditionally consider “Normal”.

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So with that, let’s take a quick look at what’s coming up in the markets this week.

Monday the markets will be closed.

Tuesday we get the Empire State Manufacturing index

Wednesday we get Core retail sales and retail sales month over month, and more importantly we get the national association of home builders market index and THIS is probably gonna look pretty good!

Thursday we will get unemployment claims, Philly Manufacturing index, building permits and Housing starts. This is definitely the most data packed day of the week.

And Friday we have Preliminary Consumer Sentiment, Existing home sales and Inflation expectations.

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