April Market Update - Latest Housing Market Update

Video Transcript below:

0:00:00.080,0:00:03.600

Well it's April and I have the latest

0:00:02.000,0:00:04.640

figures and news to share with you to

0:00:03.600,0:00:05.920

keep you up to date with what's

0:00:04.640,0:00:08.000

happening in the market, both

0:00:05.920,0:00:09.679

nationally and here in Spokane. My name

0:00:08.000,0:00:11.120

is Phil Wells i'm a real estate agent

0:00:09.679,0:00:12.639

who takes the time to keep up to date

0:00:11.120,0:00:14.000

with the market and I want you to be as

0:00:12.639,0:00:15.360

informed as possible too.

0:00:14.000,0:00:17.600

In this video we're going to take a look

0:00:15.360,0:00:19.520

at the pending home sales from February

0:00:17.600,0:00:21.520

as well as mortgage rates and loan

0:00:19.520,0:00:21.920

applications. We'll also take a look at

0:00:21.520,0:00:23.359

some

0:00:21.920,0:00:25.599

real estate articles that stood out to

0:00:23.359,0:00:27.039

me recently. We'll then try piece it all

0:00:25.599,0:00:28.560

together at the end figure out what it

0:00:27.039,0:00:30.160

all means and see we can predict where

0:00:28.560,0:00:30.560

the market's heading. So let's get into

0:00:30.160,0:00:32.399

it.

0:00:30.560,0:00:34.480

Looking first at pending sales for

0:00:32.399,0:00:36.160

existing homes in February. So why do we

0:00:34.480,0:00:36.880

look at pending sales rather than closed

0:00:36.160,0:00:39.200

sales?

0:00:36.880,0:00:40.399

Well it takes about 30 to 45 days to

0:00:39.200,0:00:42.480

close a transaction

0:00:40.399,0:00:43.520

so if we were looking February's

0:00:42.480,0:00:45.520

closed transactions

0:00:43.520,0:00:47.039

we'd be looking at market activity from

0:00:45.520,0:00:49.200

December or January

0:00:47.039,0:00:50.800

whereas pending home sales in February

0:00:49.200,0:00:52.000

give us the most up-to-date impression

0:00:50.800,0:00:53.920

of where the market's heading.

0:00:52.000,0:00:55.760

A pending home sale is exactly what it

0:00:53.920,0:00:57.760

sounds like, it's a home that's had an

0:00:55.760,0:00:58.000

offer accepted or in some other way has

0:00:57.760,0:01:00.079

ended

0:00:58.000,0:01:02.399

up in escrow waiting to transfer

0:01:00.079,0:01:02.800

ownership. Nationwide contract signings

0:01:02.399,0:01:05.680

fell

0:01:02.800,0:01:07.280

10.6% compared to January and when

0:01:05.680,0:01:10.159

compared to last February

0:01:07.280,0:01:11.600

contract signings fell 0.5%. Where

0:01:10.159,0:01:13.920

i am in the Western Region,

0:01:11.600,0:01:15.439

contract signings fell at 7.4%

0:01:13.920,0:01:18.560

compared to January this year

0:01:15.439,0:01:20.080

but were up overall 1.9% compared to

0:01:18.560,0:01:21.920

February last year. The National

0:01:20.080,0:01:22.880

Association of Realtors chief economist

0:01:21.920,0:01:24.400

summed it up like this,

0:01:22.880,0:01:26.720

"the demand for home purchases is

0:01:24.400,0:01:28.320

widespread, multiple offers are prevalent

0:01:26.720,0:01:30.479

and days on market are swift, but

0:01:28.320,0:01:30.880

contracts are not clicking due to record

0:01:30.479,0:01:32.720

low

0:01:30.880,0:01:34.880

inventory." What this man is saying

0:01:32.720,0:01:35.759

reflects almost exactly what i'm seeing

0:01:34.880,0:01:37.600

here in Spokane.

0:01:35.759,0:01:39.520

New listings are attracting outsized

0:01:37.600,0:01:41.040

attention even on homes that 18 months

0:01:39.520,0:01:42.159

ago wouldn't have been that desirable.

0:01:41.040,0:01:43.520

But there just aren't that many

0:01:42.159,0:01:45.520

transactions happening because there

0:01:43.520,0:01:47.119

aren't that many homes out there to buy.

0:01:45.520,0:01:49.040

If there were more homes available for

0:01:47.119,0:01:50.479

sale in my opinion home prices would

0:01:49.040,0:01:52.000

stop rising so rapidly

0:01:50.479,0:01:54.000

and there would be more transactions

0:01:52.000,0:01:55.840

taking place each month. Looking now

0:01:54.000,0:01:57.600

at mortgage rates. So everyone has been

0:01:55.840,0:01:59.680

hit by radio and tv ads saying that

0:01:57.600,0:02:01.280

interest rates are "near record lows".

0:01:59.680,0:02:03.520

Notice that change in verbiage, "near

0:02:01.280,0:02:04.799

record lows". It used to be "at record lows".

0:02:03.520,0:02:05.759

So what's actually been happening with

0:02:04.799,0:02:07.680

interest rates?

0:02:05.759,0:02:09.599

Sticking with February for a second we

0:02:07.680,0:02:11.039

started February with mortgage rates for

0:02:09.599,0:02:14.000

the 30-year fixed mortgage

0:02:11.039,0:02:16.160

being 2.79% and at the end of February

0:02:14.000,0:02:19.120

they were 3.27%.

0:02:16.160,0:02:20.160

That's nearly a 0.5% gain over a

0:02:19.120,0:02:21.680

one-month period -

0:02:20.160,0:02:23.200

in the mortgage world 0.5%

0:02:21.680,0:02:24.480

gain is huge. I am

0:02:23.200,0:02:26.720

able to give you up-to-date figures for

0:02:24.480,0:02:27.520

mortgages - as of April 7th (today when i'm

0:02:26.720,0:02:30.480

recording this)

0:02:27.520,0:02:31.840

interest rates are 3.34%. So it's plain to

0:02:30.480,0:02:34.480

see that sub 3%

0:02:31.840,0:02:35.920

mortgages are on their way out and will

0:02:34.480,0:02:37.120

this have an impact on the market? We'll

0:02:35.920,0:02:39.120

have to wait and see.

0:02:37.120,0:02:41.360

Sticking with mortgages let's look at

0:02:39.120,0:02:42.720

loan application rates. This is a huge

0:02:41.360,0:02:43.760

leading indicator when it comes to the

0:02:42.720,0:02:45.440

housing market

0:02:43.760,0:02:46.879

because it doesn't matter what rates are

0:02:45.440,0:02:48.560

if nobody's applying for a loan.

0:02:46.879,0:02:50.239

Let's head over to the Mortgage Bankers

0:02:48.560,0:02:52.000

Association the MBA

0:02:50.239,0:02:54.239

to see what the experts are saying right

0:02:52.000,0:02:55.680

now. Joel Kan is an associate vice

0:02:54.239,0:02:58.000

president at the MBA

0:02:55.680,0:02:59.920

and he said, "after seven consecutive

0:02:58.000,0:03:01.680

weeks of increasing mortgage rates

0:02:59.920,0:03:03.280

the 30-year fixed rate declined

0:03:01.680,0:03:04.800

three basis points to 3.33%,

0:03:03.280,0:03:06.480

which is still almost 0.5%

0:03:04.800,0:03:08.400

higher than at the start of the year

0:03:06.480,0:03:10.400

(which we highlighted before) mortgage

0:03:08.400,0:03:11.040

applications for refinancing and home

0:03:10.400,0:03:13.599

purchases

0:03:11.040,0:03:15.200

both declined but purchase activity was

0:03:13.599,0:03:16.959

still convincingly higher than the

0:03:15.200,0:03:19.360

pre-pandemic induced drop

0:03:16.959,0:03:22.319

seen a year ago as well as up six

0:03:19.360,0:03:24.400

percent from the same week in March 2019.

0:03:22.319,0:03:26.080

He continued by saying "many prospective

0:03:24.400,0:03:27.680

home buyers this spring are feeling the

0:03:26.080,0:03:30.000

effects of higher rates

0:03:27.680,0:03:31.519

and rapidly accelerating home prices.

0:03:30.000,0:03:33.840

Record low inventory

0:03:31.519,0:03:35.200

is pushing home price growth at double

0:03:33.840,0:03:37.920

the rate from a year ago

0:03:35.200,0:03:39.040

and even above the 10% growth rates seen

0:03:37.920,0:03:40.959

in 2005.

0:03:39.040,0:03:42.560

The housing market is in desperate need

0:03:40.959,0:03:45.040

of more inventory to cool

0:03:42.560,0:03:46.799

price growth and preserve affordability".

0:03:45.040,0:03:48.480

Now throughout this article here's the

0:03:46.799,0:03:50.400

point that really stood out to me,

0:03:48.480,0:03:52.640

"higher mortgage rates continue to shut

0:03:50.400,0:03:55.040

down refinance activity,

0:03:52.640,0:03:56.080

as the pool of borrowers who can benefit

0:03:55.040,0:03:58.080

from a refinance

0:03:56.080,0:04:00.239

further shrinks." In my opinion the

0:03:58.080,0:04:02.640

ability to refinance at a really low

0:04:00.239,0:04:04.400

sub 3% rate has been one of the key

0:04:02.640,0:04:05.200

factors for people not listing their

0:04:04.400,0:04:06.959

homes for sale.

0:04:05.200,0:04:08.720

There are other factors of course out

0:04:06.959,0:04:09.840

there like the low inventory to choose

0:04:08.720,0:04:11.599

from when you do sell.

0:04:09.840,0:04:13.280

But with it becoming less desirable to

0:04:11.599,0:04:15.040

refinance and there's still a huge pool

0:04:13.280,0:04:17.280

of potential buyers out there

0:04:15.040,0:04:19.040

are we gonna see more people choosing to

0:04:17.280,0:04:21.440

sell in summer 2021?

0:04:19.040,0:04:23.040

Who knows. Now i wanted to take a brief

0:04:21.440,0:04:24.080

look at some news articles that stood

0:04:23.040,0:04:26.720

out to me recently.

0:04:24.080,0:04:27.199

So just looking here at Redfin we can

0:04:26.720,0:04:30.240

see

0:04:27.199,0:04:32.320

homes sell at the fastest pace on record,

0:04:30.240,0:04:35.120

more homes ever selling above their

0:04:32.320,0:04:37.600

asking price,

0:04:35.120,0:04:38.400

a record of 39% homes sold above list

0:04:37.600,0:04:41.040

price

0:04:38.400,0:04:42.639

bidding wars surpassed 60 in February as

0:04:41.040,0:04:43.840

the housing shortage fuels fierce

0:04:42.639,0:04:45.680

competition.

0:04:43.840,0:04:47.759

Yep let's take a look at one of these

0:04:45.680,0:04:48.720

articles. Straight away the things that

0:04:47.759,0:04:51.360

jump out to me

0:04:48.720,0:04:52.960

on this article, new listings of homes

0:04:51.360,0:04:54.960

for sale were down two percent from the

0:04:52.960,0:04:58.479

same period in 2020

0:04:54.960,0:05:01.440

and down 5 from the same period in 2019

0:04:58.479,0:05:03.919

active listings fell 42 from the same

0:05:01.440,0:05:05.919

period in 2020 to an all-time low

0:05:03.919,0:05:07.440

59% of homes that went under contract had

0:05:05.919,0:05:08.960

an offer accepted within the first two

0:05:07.440,0:05:11.440

weeks on market

0:05:08.960,0:05:12.320

47% of homes had offer accepted

0:05:11.440,0:05:15.199

within the first

0:05:12.320,0:05:16.479

week. 41% of homes sold for more than

0:05:15.199,0:05:18.240

their list price.

0:05:16.479,0:05:19.759

So we can see this really supports the

0:05:18.240,0:05:21.919

data that we've highlighted so far.

0:05:19.759,0:05:23.120

Buyer demand is strong prices are up and

0:05:21.919,0:05:25.360

inventory is down.

0:05:23.120,0:05:27.199

Looking now at my local market, Spokane.

0:05:25.360,0:05:28.800

Fortunately we get data here really

0:05:27.199,0:05:30.400

quickly in Spokane, so looking at the

0:05:28.800,0:05:32.000

closed transaction data is actually

0:05:30.400,0:05:33.520

really valuable here. So let's take a

0:05:32.000,0:05:34.800

quick look and see how what's happening

0:05:33.520,0:05:35.360

locally compares to what's happening

0:05:34.800,0:05:37.199

nationally.

0:05:35.360,0:05:38.720

Here in Spokane sales are actually up

0:05:37.199,0:05:41.919

2.3%

0:05:38.720,0:05:45.520

average prices are up 20.7%

0:05:41.919,0:05:48.080

medium prices are up 17.9%

0:05:45.520,0:05:49.440

inventory is down and distressed home

0:05:48.080,0:05:51.199

sales are down as well.

0:05:49.440,0:05:52.479

Other than sales actually being up

0:05:51.199,0:05:53.120

reflects exactly what's happening

0:05:52.479,0:05:55.280

nationally.

0:05:53.120,0:05:56.880

We've got a low inventory, prices are up,

0:05:55.280,0:05:58.880

things are selling quickly - you can see

0:05:56.880,0:06:00.639

we've only got 11 day supply here of

0:05:58.880,0:06:02.479

properties in Spokane.

0:06:00.639,0:06:03.919

As soon as things do hit the market here

0:06:02.479,0:06:04.639

they're getting under contract pretty

0:06:03.919,0:06:06.240

quickly.

0:06:04.639,0:06:07.520

Now let's try piece all this together,

0:06:06.240,0:06:08.240

make sense of it and try to figure out

0:06:07.520,0:06:10.000

where we're going.

0:06:08.240,0:06:12.160

We have a reduced number of pending home

0:06:10.000,0:06:14.160

sales nationally, we have a majority of

0:06:12.160,0:06:16.479

listings going under contract above

0:06:14.160,0:06:18.080

asking price within the first two weeks,

0:06:16.479,0:06:19.039

fewer active listings and fewer new

0:06:18.080,0:06:20.560

listings as well.

0:06:19.039,0:06:22.080

All this points to one key factor

0:06:20.560,0:06:22.880

causing an imbalance in the overall

0:06:22.080,0:06:24.160

housing market.

0:06:22.880,0:06:26.160

As the economist from the National

0:06:24.160,0:06:27.759

Association of Realtors said we clearly

0:06:26.160,0:06:29.919

have a supply issue here.

0:06:27.759,0:06:31.919

More homes for sale are needed to

0:06:29.919,0:06:34.080

balance out this market and to satisfy

0:06:31.919,0:06:35.840

built up buyer demand. Like I mentioned

0:06:34.080,0:06:37.680

earlier it is possible that

0:06:35.840,0:06:39.360

rising interest rates will take away the

0:06:37.680,0:06:40.160

incentive for home buyers simply to

0:06:39.360,0:06:42.479

refinance

0:06:40.160,0:06:44.400

and just sit on a sub 3% loan for many

0:06:42.479,0:06:45.680

years. Alternatively those that could

0:06:44.400,0:06:46.639

have benefited from the low rates

0:06:45.680,0:06:48.000

already have and

0:06:46.639,0:06:49.360

are prepared to just sit on that rate

0:06:48.000,0:06:50.880

for many years. I'll be watching this

0:06:49.360,0:06:52.400

very closely for the next few months to

0:06:50.880,0:06:53.919

see what does happen. That's it for this

0:06:52.400,0:06:54.639

video. I hope you gained from this video

0:06:53.919,0:06:56.240

if you did

0:06:54.639,0:06:57.919

please give me a like and subscribe as

0:06:56.240,0:06:59.360

well, that really helps me out. If you are

0:06:57.919,0:07:00.639

in the Spokane area and looking at

0:06:59.360,0:07:02.000

listing your home for sale

0:07:00.639,0:07:03.599

please get in contact with me and i'd be

0:07:02.000,0:07:06.560

honored to work with you. Until the next

0:07:03.599,0:07:06.560

one thanks for watching.