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 A Raleigh Real Estate Crash Coming Soon, NOT!

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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

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Forbearance Data

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Lending Standards

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Foreclosure Activity

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Home Price Forecast for 2022

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Home Price Expectation Survey | Q1 2022

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Episode 143 of the Martini Mortgage Podcast with Kevin Martini Transcript

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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.

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

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

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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

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Martini Mortgage Podcast Transcript of Episode 140

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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

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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

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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 6th 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.”

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