3 Kevin Martini Things That Could Impact Raleigh Real Estate

August 12, 2022 by Kevin Martini

The question that is top of mind for many, that either one whom owns real estate in the Raleigh area or one whom want own real estate in Raleigh, North Carolina area, is if the perceived real estate pivot is an opportunity or a challenge. According to Raleigh mortgage broker and Certified Mortgage Advisor Kevin Martini; “Right now there are 3 pivots in today’s housing market that could impact current homeowners and homebuyers. They are inventory, price growth and interest rates”.

INCREASE IN HOUSING INVENTORY

The number of houses available for sale in most markets across the U.S. and in Raleigh area has increased from the ultra-low levels of the past few years however there is still an undersupply of home for sale on the aggregate. The perception that we have shifted to a full blown buyer’s market is not correct. The slight increase in inventory and days-on-market has provided some homebuyers with negotiating power.

MORE TRADITIONAL HOUSE PRICE GROWTH

House values have risen by 20%+ per year in many markets throughout the pandemic. It is unrealistic to expect that this hose price growth will continue moving forward. The growth of house prices is slowing to more of a traditional pace versus the pandemic pace, house price growth is forecasted to normalize. Sure normalization means a deceleration form pandemic levels but declaration does not means depreciation.

FLUCTUATING HOME LOAN INTEREST RATES

Raleigh mortgage rates have risen by over 2% this year in response to high inflation and the removal of the Federal Reserve’s pandemic-era stimulus programs. This means that mortgage payments have increased for potential buyers however since there are higher weekly wages, the playing flied has remained level for keeping home affordable.

On the topic of affordability, check out episode 153 of the Martini Mortgage Podcast which highlights how higher home prices and fluctuating mortgage rates are not really impacting home affordability.

RALEIGH MORTGAGE BROKER AND CERTIFIED MORTGAGE ADVISOR KEVIN MARTINI

Even with the recent perceived pivot in the real estate arena, if you are still considering to make a move, it may be time to pick up your home search back up today. Rember, it should always be home loan first and then go find your home. If you have questions about the increase in housing inventory, traditional house price growth or about the fluctuating home loan interest rates contact Kevin Martini by dialing (919) 238-4934.

Now is the real estate opportunity!

June 28, 2022 by Kevin Martini

Right now, there is noise about real estate and mortgage rates and sadly the real truth and the real opportunity is being missed. Fluctuating mortgage rates, home price deceleration and looming recession are facts but, is a recession bad for real estate values? Is there a pure need for real estate? Are home loan rates just going to get more expensive or are they going to retreat?

In this special episode of the Martini Mortgage Podcast, Certified Mortgage Advisor and Raleigh mortgage broker Kevin Martini takes a glimpse of the headlines and goes deep into the data about where home values are headed and where mortgager rates are headed.

Audio Edition of the Martini Mortgage Podcast with Kevin Martini

Video Edition of the Martini Mortgage Podcast with Kevin Martini

Consumer Price Index (a.k.a. CPI)

raleigh mortgage broker kevin martini cpi — It is critical one understands the CPI is a measurement from the same month last year. As shared in the Martini Mortgage Podcast, July, August and September 2021 CPI reading was low as compared to where it was in May of 2022 reading was, this signal that higher mortgage rates are coming since inflation drive mortgage rates higher.

Recession and Home Values

raleigh home values in past recessions by kevin martini — The housing market caused the great recession, the recession did not cause the housing crisis. Again, recession doe into mean housing crisis.

Housing Formations

New Home Supply

new housing supply by raleigh mortgage lender kevin martini — Today there are about 1.7 housing starts but a housing start is not a new homes built they are new home started. So that is not a metric to look at, completed homes and that is at 1.3 million but remember annually there are 100,000 homes that are destroyed. So now there are 1.2 million homes and there is a need for 1.4 million homes so there is a deficit of 200,000 homes.

martini mortgage mortgage group best raleigh mortgage lender

It kinda feels like we are walking the tracks in a very dark tunnel right now however, there is a glimmer of light at the end of the tunnel. What is that light coming from? Is that light from a train that is coming straight towards us or is that light a from the sunlight where we can be sitting siping a drink with an umbrella? I know that light is not coming from the bow of the train and I know that light is paradise.

To me, it appears that every news segment leads with the death of real estate or every headline online is talking how high mortgage rates are. Everyone sees these headlines but only 30% actually read the article. Crazy stat isn’t it? 70% of people make a decision on what to do based on a headline only. In this special episode of the Martini Mortgage Podcast let me take you beyond the headlines and deep into the story that now one is talking about.

Welcome to special episode 147 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; Now is the real estate opportunity!

Deceleration of home values, inventory increasing, inflation at a four decade high, six-dollar gasoline, mortgage rates fluctuating upwards, the Fed and the evil ‘r’ word, recession! So much to unpack where do I start.

As a primer, one needs to know that mortgage rates live in the Bond market. The nemesis to a Bond is inflation because inflation erodes the return of a Bond. When Bond prices fall, to attract more buyers, a higher yield is offered. When a higher yield is offered it means there are higher home loan rates available in the market.

Higher mortgage rates did not cause inflation, inflation caused higher mortgage rates. For the people in the back, let me say it another way…inflation drives mortgage rates so when inflation rises you will see that mortgage rates rise. This is very important to understand because a driving force to Bond prices is inflation.

It is my opinion, inflation is going to get worse before it will get better so that means mortgage rates are going to get more expensive and you know what else is going to get more expensive, homes…yes, granted homes will not appreciate at the levels they have over that last several years but they are still going to appreciate. With that said, I am reminded of what my real estate partner always shares with her clients — she says: “marry the house but date the rate”. What an amazing analogy and one that is not just timeless but very timely.

Let me talk about the Consumer Price Index, which is also referred to as the CPI for a moment. At the time of this recording, which is at the last days of June 2022, the CPI had a reading of 8.6%. It is critical one understands the CPI is a measurement from the same month last year. This is very important to understand, CPI is a measurement from the same month a year ago.

Here is the the Kevin Martini forecast on inflation and mortgage rates.

First, mortgage rates will be basically at the current level until mid July 2022 and many news outlets will be claiming that inflation has peaked in mid July. When I say mid July, the pivot to even higher mortgage rates will start on July 13th.

Why do they believe people say inflation has peaked in July? Well, simply put, we know that in June 2021, the inflation reading was 0.9% and the June 2022 number will be compared to June 2021.

Here is the thing that one needs to keep top of mind. In July 2021 the CPI was at 0.5, in August 2021 the CPI was at 0.3% and in September 2021 the CPI was at 0.4%. Punchline, the CPI was low as compared to today. It is my opinion, with six dollar gasoline and with all the containers just waiting to ship from Shanghai, there will not be a rise and repeat of those percentages and… inflation will rise significantly and so will mortgage rates. Then let us pepper in the the July 27th and September 21st Fed meeting.

It would be nice if we heard the word ‘pause’ from the Fed at their September 21st meeting however I have found the Fed is always late to the party and they stay too long at the party. With that said, I see the calgary coming to help mortgage rates towards the end of 2022 but more likely in the beginning of 2023.

The rate one has today will not likely be the rate they will have in 2023 or 2024 because, based on the data, there will be rate relief and an opportunity to marry a lower rate than one has secured in 2022.

So why not just wait? Why should one marry the house and date the rate today, why not just date the house, in other words, why doesn’t one just rent and wait. I can understand why one would ask this question. The answer to the question is simple, because home values will continue to keep growing and growing and growing.

With an open heart, right now we are living in what people will call in the future the good old days of real estate. Yes, right now is still an epic time to buy a house to call home and right now is an epic time to buy a house to rent even with the fact that I believe a recession is eminent.

Yes, a recession is ahead and recessions have proven to be positive for home values. In the U.S. there have been 6 recession since 1980. 1 of the 6 was the great recession where home values went down 19.7 percent. One need to know this…the demand that was before the great recession was based on speculation and speculation made price skyrocket. The housing market caused the great recession, the recession did not cause the housing crisis. Again, recession doe into mean housing crisis.

If you take the great recession out of the equation 4 out of 5 times there was a recession in the U.S., home values went up an average of 5.5%. The one out of five time it went down, values only went down 1.9%.

There was a real estate bubble that created the great recession. The real estate bubble was created in part by speculation. Today, real estate is needed and there is an under supply.

Let me go into a little more detail on the need for housing or housing demand. Let me start with household formations. First, what is a household formation. Simple put, someone leaves mom and dad and occupies a new place. So, when one occupies a new residence without vacating your residence is a household formation. Here is another example. A couple is living together but they break up and one moves out, you now need to 2 place not one, this is another example of a household formation. In the U.S. there are 1.4 million new household formations. Oh by the way, household formations are about 20% above the average right now so simply put, this is your real demand based on need. 1.4 million people need a roof.

Today there are about 1.7 housing starts but a housing start is not a new homes built they are new home started. So that is not a metric to look at, completed homes and that is at 1.3 million but remember annually there are 100,000 homes that are destroyed. So now there are 1.2 million homes and there is a need for 1.4 million homes so there is a deficit of 200,000 homes.

Is home ownership right for you and your family, I do not know but what I do know is that you owe it to explore your options that are available. I truly believe to create generational wealth one needs to own real estate. I also know that the process of homeownership always starts with the home loan first and then go find your home. It is never find your home first and then find the right loan.

My name is Kevin Martini and I am a Certified Mortgage Advisor and I am here to help. I know in this special episode of the Martini Mortgage Podcast there was a lot of data shared, I am here to answer your questions about it. If homeownership is right for you, right now is an unprecedented opportunity.

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

The Logan Martini Market Update (June 6, 2022)

June 6, 2022 by Kevin Martini

Raleigh mortgage broker and mortgage strategist, Logan Martini, shares what happened last week and what to expect this week in the Logan Martini Market Update (week ending June 10, 2022).

LAST WEEK IN THE REAL ESTATE & MORTGAGE MARKETS

Last week 2 important pieces of data were released; the Unemployment Rate held steady in May 2022 and home appreciation surged.

UNEMPLOYMENT RATE, what does it really show?

390,000 jobs were created in May and that was stronger than the 320,000 expectations however there were negative revisions to the data for previous months (e.g. March & April) which diluted the number some. It is important to know that the headline Unemployment Rate removes people who are not actively searching for a job and there were almost 6 million people that are not being counted who “want a job” but have not looked in the last four weeks. The U-6 all-in unemployment rate, which adds back all these individuals and is more indicative of the true unemployment rate, increased for the second month in a row, rising from 7% to 7.1%. This could be a signal on unemployment and a sign that things are slowing, and we may have seen the low in unemployment.

HOME PRICES are higher today than a year ago!

The Case-Shiller Home Price Index showed home prices rose 2.6% in March and 20.6% year-over-year. This annual reading is an increase from the 19.8% gain in the previous report. If this pace of monthly appreciation continues, and we are showing no reason why it would not, appreciation could be over 30% this year!

The Federal Housing Finance Agency (FHFA) also released their House Price Index. This report measures home price appreciation on single-family homes with conventional loan amounts, which means it most likely represents lower-priced homes. Home prices rose 1.5% in March and 19% year-over-year.

Up, up & up are rents according to the Apartment List’s National Rent Report which revealed that rents increased by 1.2% in May and 15.3% year-over-year.

THIS WEEK IN THE RALEIGH MORTGAGE MARKETS

The economic calendar is quiet this week, except for May’s consumer inflation report scheduled for release on Friday. The market is expecting year-over-year consumer inflation to come in at 8.3%, which would be consistent with April’s inflation rate.

There won’t be any speeches from Fed policymakers this week, due to their one-week “blackout” period before their monetary policy meeting. This may contribute to the uneasy silence and tension in the market this week. Are we in the calm before the storm?

On Friday, the calm may be disrupted if Friday’s inflation numbers come out above or below market expectations. At this point, the market is expecting the Fed to increase short-term interest rates by 0.5% at their monetary policy meeting next week. It will be interesting to see if the odds change toward a more aggressive stance after Friday’s inflation report.

The Martini Mortgage Group will not just be watching for the inflation report that will be released on Friday but will be closely watching the Wednesday’s10-year Note and Thursday 30-year Bond auctions for demand.

THE LOGAN MARTINI BOTTOM LINE

Be prepared for more volatility and remember, right now, real estate and the current mortgage rate environment remains an opportunity. From a historical perspective, home loan rates are still very low even with the upward movement in 2022. Mortgage Strategists with the Martini Mortgage Group are here to talk about what you have just read and available to help you on the path to buying you home. Contact the Martini Mortgage Group by dialing (919) 238-4934.

Logan Martini