What is going on in Real Estate and Home Loan Rates (October 2022 Edition)

October 9, 2022 by Kevin Martini

What is going on in real estate and home loan rates is the name of a new monthly series being produced by the Martini Mortgage Group for the Martini Mortgage Podcast. Episode 161 is the inaugural issue.

I truly believe episode 161 is one of the most important, if not the most important, that Logan and I have produced to date.
Kevin Martini, Certified Mortgage Broker

Video Edition of Martini Mortgage Podcast episode 161 called: What is going on in Real Estate and Home Loan Rates (October 2022 Edition)

Audio Edition of Martini Mortgage Podcast episode 161 called: What is going on in Real Estate and Home Loan Rates (October 2022 Edition)

Transcript of Martini Mortgage Podcast episode 161 called: What is going on in Real Estate and Home Loan Rates (October 2022 Edition)

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[kevin_martini]: there’s a lot of scary headlines out
there right now which are highlight in the

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[kevin_martini]: sudden rise of mortgage rates the increase
in house inventory people are now talking about

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[kevin_martini]: the future of real estate and then
you have inflation two this is a new

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[kevin_martini]: special video and audio edition of the
new monthly series from the markin mortgage group

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[kevin_martini]: that we are calling what is going
on now before i start mixing it up

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[kevin_martini]: i need to make those legal folks
happy so the primary purpose of this podcast

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[kevin_martini]: series is to inform entertain and educate
the information opinions and recommendations presented in this

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[kevin_martini]: podcast series do not constitute legal or
their professional advice opinions or endorsements of any

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[kevin_martini]: kind welcome to the martini mortgage podcast
episode one hundred and sixty one i’m calling

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[kevin_martini]: it what is going on in october
twenty twenty two inaugural issue my name is

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[kevin_martini]: kevin martini and i am a certified
mortgage advisor and producing branch manager and i’m

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[kevin_martini]: less one four three nine six two
with the martini mortgage group back gold star

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[kevin_martini]: gage financial group corporation and les three
four four six equal house seen lender with

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[kevin_martini]: all that said let’s dive into the
news on friday october seventh the bureau of

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[kevin_martini]: labor statistics reported that two hundred and
sixty three thousand jobs were created in september

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[kevin_martini]: twenty twenty two and this was above
the expectations the unemployment rate decrease from three

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[kevin_martini]: point seven to three point five per
cent to the data from these reports spook

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[kevin_martini]: the markets because it provides an unofficial
signal that the fad will continue on its

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[kevin_martini]: tightening journey and it is likely to
be very aggressive to get inflation under control

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[kevin_martini]: moving forward let me be clear the
fan needs tightening because they need to reduce

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[kevin_martini]: demand in the market place and this
reduced demand should be the thing that teams

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[kevin_martini]: the beast and that beast is inflation
it is my opinion the fed will raise

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[kevin_martini]: rates in the november and december meetings
i also believe the fed fung rate could

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[kevin_martini]: be increased by one and a half
point it is an undisputable fact we have

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[kevin_martini]: not seen inflation at this level for
decades and the fens actions to be transparent

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[kevin_martini]: have helped but they’ve helped incrementally but
inflation is still persistent and high this is

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[kevin_martini]: critical because inflation is the nemesis or
the arch enemy to mortgage rates you see

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[kevin_martini]: mortgage rates are not controlled by the
federal reserve nor do mortgage rates come from

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[kevin_martini]: the stock market mortgage rates live in
the bond market inflating a road the return

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[kevin_martini]: of a bond just because there is
inflation it does not mean the markets will

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[kevin_martini]: stop in the simplest of examples market
makers will offer a higher yield to a

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[kevin_martini]: mortgage bond investor when more gage bond
yield is increased that means mortgage rates will

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[kevin_martini]: go higher now i feel that the
feds actions will get inflation under control in

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[kevin_martini]: the first quarter of twenty twenty three
it’s critical that i share this based on

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[kevin_martini]: history the fact has always been late
to the party and they stayed too long

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[kevin_martini]: to the party they were clearly too
late to this party because they thought inflation

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[kevin_martini]: was transiatory not sticky the developing story
is what will they do when inflationary pressures

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[kevin_martini]: are east stay tuned i think they
will stay after the party is over and

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[kevin_martini]: then they will promoting growth rapid massive
growth and this growth will provide a sharp

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[kevin_martini]: drop in mortgage rates by the way
that’s just not me fan may has said

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[kevin_martini]: that too let’s talk about mortgage rates
for a hot second for some the current

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[kevin_martini]: rate environment was not possible however for
a long term fans of the martini mortgage

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[kevin_martini]: podcast they were advised that this was
likely to happen and for those new fans

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[kevin_martini]: let me be clear it is probable
that mortgage rates will get worse before they

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[kevin_martini]: get better it is not unthinkable that
mortgage rates could start with an eight sooner

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[kevin_martini]: than later there are advanced strategies offered
by myself and fellow morgan strategist logan martine

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[kevin_martini]: to help today and in the future
too if home ownership is right for you

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[kevin_martini]: as first time home buyer or as
a repeat home buyer one of the many

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[kevin_martini]: options is the martini mortgage group no
contract lock program with a free flow down

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[kevin_martini]: up to ninety days this is a
very simple program but it is very powerful

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[kevin_martini]: here’s how it works a future home
buyer ken lock their mortgage rate at to

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[kevin_martini]: day’s price and that price can be
protected for up to ninety days in the

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[kevin_martini]: event there’s an improvement in the rate
when the future home buyer goes under contract

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[kevin_martini]: for their new home they will have
the option to float the right down to

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[kevin_martini]: the improved right how cool is that
this unique no contract lock program can be

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[kevin_martini]: combined with a seller paid by down
program offered by the martini mortgage group for

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[kevin_martini]: more information about the seller paid by
down check out episode one five nine of

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[kevin_martini]: the martini mortgage podcast since it explains
it in great detail the benefits of a

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[kevin_martini]: seller paid by down just give you
a glimpse if that’s okay real belief fly

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[kevin_martini]: there are three types of by downs
there’s a one one by down there’s a

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[kevin_martini]: two one by down and there’s a
three to one by down for illustration only

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[kevin_martini]: let’s assume your rate you lock with
our no contract lock program at six per

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[kevin_martini]: cent and let us assume you negotiate
or two one seller paid buy down this

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[kevin_martini]: would mean in the first year your
rate would be four per cent and in

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[kevin_martini]: the second year your rate would be
five per cent and then it would go

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[kevin_martini]: to six for your three through thirty
seller paid buy downs are a win win

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[kevin_martini]: since this program benefits both the seller
and the buyer too it’s not just me

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[kevin_martini]: but it is many experts believe that
the mortgage rates will significantly improve towards the

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[kevin_martini]: end of twenty twenty three to the
beginning of twenty twenty four the experts that

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[kevin_martini]: our bullets she that could be as
soon as the second quarter of twenty twenty

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[kevin_martini]: three to be transparen i think the
bulls are being a little bit too aggressive

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[kevin_martini]: and running too fast here is the
punch line the home loan rate you get

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[kevin_martini]: today is not likely going to be
the home loan rate you will have in

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[kevin_martini]: a couple of years because when the
thed gets inflation under control again when not

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[kevin_martini]: if and while they are staying at
the party too long which they will there

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[kevin_martini]: are going to be re finance opportunities
according to fanny may as i said earlier

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[kevin_martini]: they expect rates to start with the
four sometime in twenty twenty three this is

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[kevin_martini]: why the phrase marry the house and
date the rate is being said so frequently

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[kevin_martini]: by myself my fellow mortgage strategist logan
martini and others let me break it down

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[kevin_martini]: it is very probable that mortgage rates
will increase over the next three to six

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[kevin_martini]: months to levels that millennials have never
seen and even some folks that are generation

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[kevin_martini]: exerts mortgage rates are not the only
thing going up rents are going up to

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[kevin_martini]: don’t believe me well let me share
the facts in rale north carolina from july

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[kevin_martini]: twenty twenty one to july twenty twenty
two rents for one bedroom apartment went up

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[kevin_martini]: two point one per cent and a
two bedroom apartment went up forty four point

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[kevin_martini]: eight per cent in durham the bull
city of north carolina for the same period

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[kevin_martini]: of time to every apartment went up
fifty four point two per cent you know

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[kevin_martini]: what else is going up home values
did you know that three point eight four

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[kevin_martini]: per cent is the average annual growth
in home prices from ten eighty nine to

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[kevin_martini]: two thousand nineteen check it out i
took out the eighteen point five per cent

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[kevin_martini]: of annual appreciation per year for the
last two years of this calculation because the

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[kevin_martini]: home christ growth during the presence of
the eagle pandemic was a typical so three

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[kevin_martini]: point eight four per cent is the
past what about the future it is my

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[kevin_martini]: opinion what one person says about the
future of home values is irrelevant for me

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[kevin_martini]: and for the families the martini mortgage
group serves the gold standard of future home

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[kevin_martini]: uses the home price expectation survey done
every quarter by pullsnomics and that is because

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[kevin_martini]: it’s not one person’s opinion it is
the opinion of over one hundred experts oh

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[kevin_martini]: by the way the home price expectation
survey is expecting a five year cumulative appreciation

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[kevin_martini]: of over twenty four percent closer to
twenty five actually let me get granular for

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[kevin_martini]: a hot second let me not use
the current forecast from the home price expectation

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[kevin_martini]: survey data nor the data from the
past twenty years prior to the evil pandemic

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[kevin_martini]: let me be super conservative and let
me just say three percent appreciation a year

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[kevin_martini]: for the next five years what would
this mean simply put a fifteen thousand dollar

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[kevin_martini]: down payment on a three hundred thousand
house could grow to sixty two thousand dollars

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[kevin_martini]: over five years twenty five thousand dollar
thou payment on a five hundred thousand dollar

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[kevin_martini]: house could grow to a hundred and
four thousand dollars in over five years a

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[kevin_martini]: forty five thousand dollar down payment on
a nine hundred thousand dollar home could grow

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[kevin_martini]: to a hundred and eighty eight thousand
dollars over five years not owning a home

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[kevin_martini]: could not just cost you thousands but
tens of thousands it’s in we all have

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[kevin_martini]: to have a roof over our head
some will rent it and when you rent

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[kevin_martini]: you pay a mortgage you’re not paying
your mortgage you’re just paying for your landlords

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[kevin_martini]: mortgage for them others will own that
roof and logan martini and myself help them

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[kevin_martini]: secure the proper mortgage strategy for that
roof let me say this another way for

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[kevin_martini]: the people the back the growth in
home appreciation has decelerated in twenty twenty two

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[kevin_martini]: but just because home prices have decelerated
it does not mean homes are going to

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[kevin_martini]: depreciate in the aggregate poets are going
to continue to appreciate and grant it in

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[kevin_martini]: some markets that were extra frothy we
may see a decline from their peak key

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[kevin_martini]: word is some markets right now home
buyers can still find opportunities and i believe

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[kevin_martini]: that today a home buyer has the
proper conditions to secure more buying power if

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[kevin_martini]: you’re thinking of buying a home for
the first time or as a repeat home

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[kevin_martini]: buyer simply give a mortgage strategist with
a martini mortgage group a jingle by dialing

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[kevin_martini]: nine one nine two three eight forty
nine thirty four because it should always be

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[kevin_martini]: home long first and then go find
your home okay okay okay let me talk

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[kevin_martini]: about this elephant that’s in the room
many good people were hurt during the housing

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[kevin_martini]: crisis in two thousand eight if you
are not directly impacted is likely that someone

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[kevin_martini]: you cared about was negatively impacted is
sad what happened during the housing crisis but

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[kevin_martini]: the events that caused it are not
present today sure the housing crisis caused the

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[kevin_martini]: great recession however the great recession did
not cause the housing crisis let me be

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[kevin_martini]: crystal clear recession does not housing crisis
today i am reminded by a quote from

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[kevin_martini]: warren buffet be fearful when others are
greedy and greedy when others are fearful i

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[kevin_martini]: would like to add get educated and
make an educated decision and was right for

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[kevin_martini]: you and your family based on the
facts not based on the headline or what

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[kevin_martini]: you heard the backyard barbecue there is
never a substitute for education and armed with

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[kevin_martini]: a proper knowledge you can find right
now it is time to be greedy because

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[kevin_martini]: i have confirmation more millionaires are made
when people are fearful inclosing home ownership is

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[kevin_martini]: not right for everyone and the only
way you can truly know if home ownership

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[kevin_martini]: is right for you and your family
is by searching for is not by searching

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[kevin_martini]: for homes on line or by driving
all over town to visit but houses the

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[kevin_martini]: first step is always a home loan
and then once you have clarity of the

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00:15:01,032 –> 00:15:06,758
[kevin_martini]: cost and the certainty that you can
secure the proper financing for yourself and your

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00:15:06,819 –> 00:15:12,174
[kevin_martini]: family then you can make an educated
decision if home ownership is right for you

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00:15:12,756 –> 00:15:20,539
[kevin_martini]: and your family if not it’s totally
fine but you’re making a decision based on

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00:15:20,719 –> 00:15:25,914
[kevin_martini]: education not got but if it’s right
for you then you can go find your

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[kevin_martini]: home being lager focused and with certainty
my name is kevin martini and my fellow

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00:15:32,503 –> 00:15:37,171
[kevin_martini]: morgan strategist is logan martini and we
are here to help you if you have

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00:15:37,251 –> 00:15:41,739
[kevin_martini]: questions about what was in this episode
episode one sixty one of the martini morte

147
00:15:41,799 –> 00:15:48,049
[kevin_martini]: podcast no we are here our number
is nine one nine two three eight forty

148
00:15:48,130 –> 00:15:55,314
[kevin_martini]: nine thirty four we both look forward
to help oh by the way our website

149
00:15:55,374 –> 00:16:02,366
[kevin_martini]: has fresh and real information about securing
the proper mortgage strategy along with relevant information

150
00:16:02,687 –> 00:16:09,994
[kevin_martini]: on what one needs to know if
they thinking of buying or need additional resources

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00:16:10,676 –> 00:16:19,500
[kevin_martini]: check it out by going to w
w w martini mortgage group dot com thank

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00:16:19,520 –> 00:16:24,213
[kevin_martini]: you for tuning into this new monthly
series called what the heck is going on

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00:16:24,273 –> 00:16:29,904
[kevin_martini]: in october twenty twenty two and thank
you for sharing this episode with someone you

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00:16:29,965 –> 00:16:33,941
[kevin_martini]: care about peace and blessings

The loudest voice is an idiot!

July 9, 2022 by Kevin Martini

The headlines today about real estate and mortgage rates is not breaking news as advertised, it is a developing story.

If you only listen to the headlines of home value deceleration and fluctuating mortgage rates, you will miss the real opportunity that is present in housing. Today, the news has become so sensationalized and headline may be factual correct but they do not tell the whole story and that is why Raleigh mortgage broker and Certified Mortgage Advisor Kevin Martini hosted episode 149 of the Martini Mortgage podcast which is called: The loudest voice is an idiot!

Recession

It appears inevitable that a recession is coming or worse, we are already in a recession. Based on history, mortgage rates rise leading into a recession because of inflation. At the end of the recession, over the last 5 recession, mortgage rates have fallen just under 2%.

raleigh mortggage rates and recesion by kevin martini

best raleigh mortgage broker kevin martini with martini mortgage group

Martini Mortgage Podcast Transcript

martini mortgage mortgage group best raleigh mortgage lender

Today we live in a digital world where our phones are constantly beeping with notifications. Then, shortly after you read the notification, your friend texts you the headline of what you were just notified on.

Even though we are in world where we feverishly get unsolicited information or we get on-demand 24-hours a day information we are seeking, I always ask myself this question, is the information that is being sent or is the information I secured actually correct. What do I think this, well, I have been in the financial services since the late 80’s and I have worked exclusively in the real estate and mortgage arena since 2006 and today I am hearing pundits sharing obituaries of real estate because seasonally adjusted sales for 2022 are at 5.4 million vs the 6.1 million in 2021. These self claimed guru’s are giving the eulogy for mortgages because mortgage rates have fluctuated upward this year.

Headlines often mislead people into thinking something but the really story is in the article and by looking at the data. Sure mortgage rates are higher and yes, less homes will be sold in 2022 than 2021. Both of these facts are accurate but misleading…let me expand, in 2022, there is projected to be more home sold then there were in 2019 which is before the veil pandemic reared its head and…from a historical perspective, mortgage rates remain near all-time low.

Welcome to special episode 149 of the Martini Mortgage Podcast, my name is Kevin Martini and I am a Certified Mortgage Advisor and a member of the National Association of Certified Mortgage Advisors. I help families create generational wealth in real estate with the right mortgage strategy. I am located in Raleigh, North Carolina however myself along with my very talented crew of mortgage professionals 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; The loudest voice is an idiot!

Let me start with mortgage rates and then shift to talk about real estate home values.

Higher mortgage rates do not cause inflation, inflation causes higher mortgage rates. With these historic high inflation readings, mortgage rates have moved upward in 2022. To me, home loan rates are still on-sale. Let me give you some perspective. When my wife and I purchased our first home, the rate was in the mid 9’s and that was for an adjustable rate mortgage not even a fixed rate mortgage.

When something deviates from the expected, it is called an anomaly. The pandemic was an anomaly. The pandemic created a recession. Did you know in February 2020 we went into a recession. In February 2020, the 30-year fixed rate was at 3.8% and then on the other side of the recession in the April 2020 the 30-year fixed rate dropped to 2.8%.

The pandemic and the end of 2020 recession created an atypical mortgage rate environment. Money for a home loan was not just on-sale, it was on clearance. This clearance created a surge in home buying activity.

The pandemic clearance mortgage rate is no longer available however mortgage rates are still on sale and they are not at the suggested retail price. Check this out, in late 70’s mortgage rates were over 11%. In the 80’s mortgage rates were a little under 17% and that today is a credit card rate. In 1990, mortgage rates were more than 10%. When I say money is on sale, today you will likely get a better rate than when you parents purchased a home and a materially better rate than when your grandparents purchased a home too.

Here is one thing that you need to know. The first thing is this; it should always be home loan first and then go find your home. The second thing you should know is. it’s OK to marring your home and date your rate. Almost all the families I have had the privilege to serve this year are dating their rate. All families I have served and manage their mortgage are right now are dating their rate and are married to their home.

History is crystal clear. The Fed takes action to get control of inflation. Granted they are always late to the party and they stay too long but they get the job done and the inevitable recession of 2022 will be in the rearview mirror. Once recession 2022 is in the book, mortgage rates would shift significantly lower. Don’t believe me? Ok, let me share the raw data with you.

In the US there were six major recession since 1980. In the 1980 recession which lasted six months mortgage, mortgage rates went from 16% to 11.8%.

There was a recession that started July 1981 and it ended 16 months later in November of 1982. At the start rates were 18% and post recession went down 5% to 13%.

In the early 90’s there was an 8-month recession and mortgage rates went form 11% to 8.8%.

When there was a recession in the early 2000’s, the it lasted 8-months and mortgage rates went from 7.4% to 6.8%.

Then there was the great recession which lasted 18 months and mortgage rates dropped by more than 1%.

The COVID 19 recession was very brief. Mortgage rates went from basically 4% to 2.8%.

Now there is a couple things you are thinking right now because you were either part of the housing crisis in 2008 or someone you cared about was negatively impacted by the housing crisis.

It is critical to know, he great recession was caused by the housing crisis and it is critical to know that recession’s do not cause housing crisis. The ingredients that caused the housing crisis are not present today and will not be rinsed and repeated.

As you have just heard, money is on-sale today and it is likely to go back on clearance once this inflationary pressure is relieved and you know what else is on sale today, homes.

You will be hearing chicken little shouting that inventory of homes for sale is up. It is an indisputable fact that months of inventory of homes for sale is higher in May 2022 that it was January of 2022. Oh by the way, May 2022 is the most recent data available at time of recording episode 149 of the Martini Mortgage Podcast.

In January 2022 there was a 1.6 month supply and in May 2022 there was a 2.6 month supply. Let me state the fact, some of this increase is because of more homes entering the market but the major reason is because there is slower pace in sales and that is not a bad thing. Let me say it another way, essentially right now there is the same inventory but with slower sales cycle and this represents an epic opportunity for a home buyer.

Granted, technically we are still in a Seller’s market. You see when the supply of homes for sale is under 6-months, it is considered Seller market and when supply is greater than 6 months it is considered a buyer’s market. So, we are under 6-months, why am I saying that right now is an epic opportunity for home buyers?

Simply put you a buyer has a stronger negotiating position today than they did in January. In addition, according to the home price expectation survey, home values are predicted to essentially have a 25% cumulative appreciation over the next 5-years and there is more, there is a housing supply shortage in the U.S. right now. According to the National Association of Realtors, there is currently a shortage of 5.5 million homes. This shortage will not be resolved in a year or even 5-years, it is going to take decades.

Now let me talk about existing home sales. They were 6.1 million in 2021 and the forecast is at 5.4 million for 2022. Yes, 2022 will have less sales than 2021 but remember that 2021 was part of the pandemic anomaly. 2022 will be better than 2019 and 2018 and is just a little less than 2017 however the year is not over.

Real estate is not ripe and written like many tabloids are sharing. Real estate is green and growing! Now is the time to marry your home. Yes, you can still get a 30-year fixed rate that you can date and take advantage of the historic downward momentum in mortgage rates post-recession. It is my opinion, based on history, there could be a 2% reduction in rate. Well when that happens, we will not longer date the rate, we will marry it.

In closing, there are a lot of talking heads peddling headlines to shock and scare…when you look at the data, it is clear, right now is the time to explore your homeownership options. My name is Kevin Martini and I am a Certified Mortgage Advisor and I provide the families I serve with bankable guidance by being transparent with all of the options. During our free consultation, I can tailor a program to meet your individual needs based on your unique situation. In addition, all the families I serve are empowered and have certainty.

You can reach me by dialing 919.238.4934.

Thank you for tuning in and please share this episode with someone you care about.

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 contact 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

A Raleigh Real Estate Crash Coming Soon, NOT!

May 19, 2022 by Kevin Martini

A topic that is on the mind of many potential first-time homebuyers and current homeowners in Raleigh, North Carolina and really in every city in the U.S. is, are heading into a housing crash because we are in a housing bubble that is going to burst.

Raleigh Mortgage Broker and Certified Mortgage Lender, Kevin Martini, hosts a very special episode of the Martini Mortgage Podcast called: A Real Estate Crash Coming soon, NOT!

Episode 143 of the Martini Mortgage Podcast goes beyond the real estate headlines and deep into the data.

Home Price Appreciation Since 1945

best raleigh mortgage broker kevin martini histporical raleigh appreciation since 1945

Forbearance Data

best raleigh mortgage broker kevin martini

Lending Standards

Foreclosure Activity

Home Price Forecast for 2022

Home Price Expectation Survey | Q1 2022

raleigh mortgage broker kevin martini 507 n blount st raleigh nc 27604

Episode 143 of the Martini Mortgage Podcast with Kevin Martini Transcript

A topic that is on the mind of many potential first-time homebuyers and current homeowners in Raleigh, North Carolina and really in every city in the U.S. is…are heading into a housing crash because we are in a housing bubble that is going to burst.

I truly understand why many are concerned with the idea we are in a housing bubble and it is going to burst because 15-years ago we saw home prices fall and it was very painful.

Let me properly communicate this…2022 is not 2008!

Welcome to episode 143 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 of mortgage professionals 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; A Real Estate Crash Coming Soon, NOT!

Opinions are like belly buttons, everyone has one. Some opinions are based on what one feels and some opinions are based on data. I believe when you use data to form an opinion it clears the path so one can make an educated decision based on facts. I believe educated decisions puts you ahead of the crowd.

Some folks feel we are in a real estate bubble and this bubble is going to burst and when it burst it is going to cause a housing crash like we saw in 2008. If you feel this way, with respect, you are incorrect. Let me share with you why we are not in a housing bubble and why we are not heading into a housing bubble.

Let me start with when the modern day housing boom started and that was 1945. World War II ended and soldiers were coming back and they were using the earned VA benefit where they could buy a home. Ever since then and up to today…there has ONLY been one time where homes in the U.S. lost a significant value and that was in 2008.

Why did we see homes lose value in 2008?

There were several reasons why homes lost value and they were from pure market speculation to, over supply to, very loose lending standards among other things.

When I say very loose lending standards, I mean back then you could secure a home loan with no income so a job was not required hence there was no verification of employment was even asked for. Think about it, you could buy a home or take money out of your home without really being able to qualify or have the ability to repay the home loan. Simply put, many people that were unable to afford a home were able to buy a home.

I feel it is natural to be concerned if today people are able to make their mortgage payments. Since the evil pandemic reared its ugly head, many families had to go into forbearance. In the simplest form, forbearance is a loan deferment where one can temporarily stop making payments.

About 4.8 million used forbearance to navigate during the pandemic and today there are less than 700,000 loans in forbearance as of April 2022. The number of mortgages in forbearance has dropped significantly and it is true, not everyone will be able to get out of forbearance successfully however that number is very low but rember this, the families that have not been able to recover are not upside-down on the the home and they have the ability to sell and retain a gain to get on with rebuilding. This is very different than what happened 15-years ago.

Aggressive lending standards were one of the components of the housing crisis, and let’s look at where we are today. Today lending standards are nothing like they were in the 2000s.

Consider home loan product risk and borrower risk. Think of the designer mortgage product risk as the all loans that are available to people such as NINA, which was an acronym for no income no assets or SISA, which was an acronym for stated income stated assets. These designer mortgage products have been virtually eliminated from the marketplace.

Oh by the way, these loan programs were not bad products in my opinion. Crazy statement? Not really, when you know these products had a place for the right borrower based on thier situation but these products were sold by some very bad actors to the the wrong people.

Today when getting a mortgage, there is a common sense approach to your ability to repay the home loan. Has it gotten harder. Well, yes if you compare it to the 2000’s but, common sense is still present with underwriting with the Martini Mortgage Group and I feel that product risk and borrower risk is balanced today.

Don’t believe me? Well, today we are at all time low with foreclosure activity. Sure, the last couple of years there has been a moratorium in place and the federal government has stepped in and said, look, we’re not going to process these foreclosures during the pandemic. However, back during the housing crisis, it was tragic that over nine million people went through foreclosure.

Listen, foreclosure are sadly always going to happen because bad things happen to good people. It is sad but it is a reality. Today with the common sense lending standards that have been deployed has led to less foreclosures in the marketplace pre-pandemic and post pandemic.

In other words, with highly qualified or a better qualified borrower, you’re going to see less defaults and we’re seeing exactly that and provides additional confirmation that the light at the end of the tunnel is not a train coming at us but it is rays of sunshine.

I had a conversation with a family I am working with and they were concerned about a ton of things and I understood and I appreciated their concerns. They felt like you may feel…let us see if that is the case. They felt homes are getting too expensive and people are not going to be able to support their debt load and this would cause a collapse in the housing market.

I understand the thought process but the data does not support the thesis because if you look at data from the Federal Reserve, household debt service ratio for mortgages and basically it measures the percentage of disposal personal income. So, think about the total mortgage payments divided by the total disposal personal income. Make sense?

Where the household debt service ratio is for mortgages right now much much lower than where we were in the housing crisis, even lower than we were in the 80s and 90s. And why is that? Because of rising wages. Because of interest rates that we’ve seen. And because folks that are holding mortgages today are in a much, much better position than where they were back in the housing crisis of ‘08.

So is there a bubble forming or are we in a bubble that is getting ready to burst – NO! No there is not a bubble forming and NO we are not in a bubble that is getting ready to burst. There is not an imminent housing crisis however we are right now in a housing boom!

I believe when we look back at 2022 3 to 5 years from now we will call this period of time the good old days of real estate. In other words, you will be with either be very happy that you purchased a home in 2022 or you will wish you would have purchased a home in 2022.

To highlight, Let us look at where we headed. Home prices are higher and Raleigh mortgage rates are higher and getting a mortgage today is a process not an event and then all the chatter from the Federal Reserve…what does it all mean for home values.

Simply put, Fannie Mae, Freddie Mac, CoreLogic, Mortgage Bankers Association, National Association of Realtors, Zellman and the Home Price Expectation Survey are the 7 entities the Martini Mortgage Group follows religiously to gauge the future of home values and the average of all 7 say that home values in 2022 will go up 9%.

Are homes going to lose value, well the experts don’t see that. Now we are going to see a deceleration of home values in 2022 as compared to 2021 however declaration does not mean depreciation. Declaration simply means that homes are not going to appreciate as fast as they have. I think deceleration is a good thing and is a sing of a healthy sustainable housing market.

If we want to look beyond 2022 I believe the best survey to look at is the Home Price Expectation Survey which is done by Pulsenomics. The Home Price Expectation Survey is not one persons opinion it is the opinion of a panel of over 100 economists, investment strategists and housing market analysts and they project 9% appreciation this year, 4.74% next year, 3.67% appreciation in 2024, 3.41% in 2025 and 3.57% in 2026. That is a 5-year cumulative appreciation of 26.8%.

Oh by the way, 3.84% is the average annual growth in home prices from 1989 to 2019. I was purposeful not to add the last 2-years which has been north of 20% per year to give you some perspective how strong the market has been and will continue to be.

Let me wrap it up. The market today is nothing like the market was 15-years ago. I did not mention it but it is noteworthy to share there are more households today than there were in in 2007. In 2007 there were 116 million households and today there are 130 million households. That is 14 million more households looking for home. In 2007 there are 3.7 million homes for sale and today there are under 900,000 home for sale. More demand and less supply — yikes!

I know there are inventory challenges and mortgage rates have drifted upwards and sure it would have cost less if you purchased 12-months ago but I am reminded of that old Chinese proverb.

“The best time to plant a tree was 20-years ago. The second best time is now.”

Right now is the time to explore your homeownership options as a first-time or as repeat homebuyer. Perhaps you are living in your house that you own but you and your family have outgrown it— now is the time to upgrade. Perhaps you are renting and paying your landlords mortgage for them, now is time to explore your options.

My name is Kevin Martini and I am a Certified Mortgage Advisor with the Martini Mortgage Group. I provide trusted advice with a frictionless process that offers great rates and certainty to you and your family. My number is 919.238.4934.

Looking forward to connect, stay safe out there and wishing you peace and blessings.