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Now is the real estate opportunity!

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 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

raleigh mortgage lender kevin martini on 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

 Recession, Rates and Real Estate in Raleigh

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When there is a conversation about a recession coming to Raleigh, North Carolina it is natural to be curious about what it means for mortgage rates and real estate values.

Episode 142 of the the Martini Mortgage Podcast with Certified Mortgage Advisor Kevin Martini is called Recession, Rates and Real Estate. In this special episode, Kevin Martini unpacks what experts believe will happen to Raleigh real estate and Raleigh home loan rates when there is a recession because there will be one — it is not a question of ‘if’, it is ‘when’ it will happen.

recession rates and real estate martini mortgage mortgage group best raleigh mortgage lender

There is a lot of chatter recently about the thoughts of a recession coming to visit us. There are a lot of conversations about the upward movement in mortgage rates in 2022. And about the Federal Reserve, increasing the Fed funds rate and reducing their balance sheet. There is the reality that homebuyers are facing challenges finding the right place to call home. Welcome to Episode 142 of the Martini mortgage podcast. My name is Kevin Martini, and I’m a certified mortgage advisor with the Martini Mortgage Group, which is located in Raleigh, North Carolina, however, myself, along with a very talented crew of mortgage professionals, help families in all 100 counties in North Carolina, and pretty much in every state in the US to I’m calling this special episode of the Martini mortgage podcast recession rates and real estate recession rates and real estate. Oh, my, let us start with the recession. What is it simply put it is when there’s a decline in economic activity for two consecutive quarters, as reflected by the GDP and other economic indicators. GDP in the US dropped 1.4% In the first quarter of 2022. And this drop is an indicator of the potential recession coming. When will it come? I do not know. I do know this as it relates to a recession. It’s not if a recession is going to happen. It is when will a recession happen? And when the recession happens, what will happen to mortgage rates and real estate home values. When the recession rears its head. Historically, real estate performs very well. Since 1960, in the US, there have been nine recessions. In eight out of nine recessions, real estate values increased during the recession. The anomaly was during the Great Recession, which was during the housing crisis. Today, it is nothing like it was in 2008. Today, there were requirements to get a home loan. And back then the only requirement to secure a mortgage was to make sure you were breathing. Let me highlight before the Great Recession. If you had a low credit score with no job, you were getting a home loan, and in many instances you are able to get multiple home loans. It is critical to highlight to you the housing crisis led us into the recession, home values have not declined because of the recession. They declined because of the housing crisis. Let me say this again for the people in the back. The housing crisis led us into recession, home values did not decline because of the recession. They declined because of the housing crisis. Today, the home loans on the books are nothing like the ones that were on the books during the housing crisis. In addition, during the housing crisis, there was an excess inventory back then which amplified the situation. Recession does not mean reduction of home values. Also I feel obligated to highlight this deceleration of home values does not mean depreciation of home values. It is expected that values will not appreciate at the rate they have appreciated, hence deceleration. However, homes are still forecasted to appreciate. According to the home price expectation survey, home values over the next five years are projected to appreciate cumulative about 25% With the current inflation, some have the opinion that this cumulative 25% appreciation we’re five years is a conservative prediction. Here’s why.

At the time of this recording of episode 141 of the Martini Mortgage Podcast, inflation is 8.5%. During periods of inflation, fixed assets like real estate perform very well since Owning a home is a hedge against inflation. Let me illustrate using what happened in the 70s During the 70s, consumer prices increased 7.1%. However homes appreciated 9.9%. Too far back. Okay. Let us look at the 90s. during that decade, consumer prices increased 3%. And homes appreciated 4%. When we look back at this period of time that we’re in today, it is my opinion, we will look back at 2022 as the good old days of real estate, we will right now are in a housing boom, not a housing bubble friends. Sure, this market has challenges and I understand it’s not easy out there. However, there are things that I can do as a certified mortgage advisor to put your offer in the pole position by allowing you to make a same as cash offer. Nothing very good for you is easy. If you want to be healthy, you have to exercise and eat right. It’s hard to exercise consistently and eating right is hard to Yes, buying a home for the first time or as a repeat homebuyer is not easy today. However, it’s easier if you follow the proper steps. The first step to homeownership is always the home loan. And the second step is to go find a home. And the third step is to make a same as cash offer with an approval package from the Martini Mortgage Group. I know their inventory challenges, and mortgage rates have drifted upward. And sure it would have cost you last if you purchased 12 months ago. But I’m reminding you that of this old Chinese proverb The best time to plant a tree was 20 years ago. The second best time is now for all those out there that fear our real estate bubble. Let me talk about inventory for a hot second. In 2007, there were 116 million households. Today there are 130 million households. Simply put, there are 14 million more households. And Freddie Mac estimates 3.8 million homes shortage of single family homes for those 130 million households. Let me compare this to the peak in 2007, where there were 3.7 million homes available for sale. And today there are under 900,000 homes for sale. Again, right now is an opportunity and is worth the effort. Even if mortgage rates are higher today, as compared to this time last year. Let us talk about mortgage rates and the Federal Reserve and what they are doing. As a primer. Mortgage rates are based on mortgage bonds, not on the federal funds rate. The Fed funds rate and mortgage rates are two different things. Remember when the Fed funds rate was zero, and many thought that meant mortgage rates were at zero? Obviously, you know that was not the case. Mortgage rates are based on mortgage bonds. When mortgage bond price moves downward to attract more buyers yield is increased. When yield is increased home loan rates rise between 1231 2021 and the end of April of 2022. The mortgage bond price has deteriorated nine point during that period of time. Why the move? Inflation is one of the key reasons for this move in mortgage rates. Again, home loan rates live in the bond market and the Nemesis to the to a bond is inflation. Inflation is high and high inflation negatively impacts mortgage rates. However, from a historical perspective, mortgage rates are still at a record level. Don’t believe me? Well, let

me share this fact with you. When my wife Ronnie and I purchased our first home, the rate for our mortgage was in the mid 90s. And that was not even for a fixed rate mortgage. If our first mortgage would have been a fixed mortgage, it would have been in double digits. What I am going to share now Next, it’s just literally going to blow your mind. What the Federal Reserve is doing today, based on history will improve mortgage rates over time. Raising the Fed funds rate is designed to lower inflation, lower inflation means improvement in home loan rates. Now, inflation did not just pop up overnight, it took time, so will take time for the Fed to get inflation under control. But they will. When inflation gets under control, mortgage rates should improve. You heard me correctly, I believe, rates will come down from the current levels. However, they will likely get worse before they get better, they will get worse because the Fed has a very large inventory of mortgage bonds they will be selling off. But when the dust settles, it should be a good thing. When will the dust settle? It is my gas best case by the end of 2022. But that may be too optimistic with the quantity of bonds they have to sell. And based on where inflation is today. But worst case, in the beginning of 2024. So should you wait to time the market? No. timing the market for mortgage rates is insane, because it’s essentially impossible to do. But even if you could wait it out for the pivot to lower mortgage rates, you will be paying a premium for the home since the home would have appreciated why you wait it. Here’s the fact you have three options today. Number one, call your folks and see if your bedroom is still available. Number two as you can keep renting and we all know that rents are up just under 20%. And then you’re subject to future increases. Or number three, take advantage of the housing boom, we are in today and lacking your housing costs. And no if I’m your mortgage advisor, I will monitor the markets for you after closing for the opportunity to lower your fixed housing costs with a refinance. In closing.

It is not if a recession will happen. It is when it will happen. During periods of recession, home values have done very well. Right now there’s not a housing bubble. Right now there is a housing opportunity. Right now mortgage rates are higher than they’ve been in the past several years. However, they are still very attractive and below the historic average. The Fed is working hard to control inflation, and they will but it will take time. Speaking of time, right now is it time to explore your homeownership options as a first time homebuyer or as a repeat homebuyer. Perhaps you are living in a house that you owe. But you and your family have outgrown it. Now is the time to upgrade. My name is kevin martini and I am a certified mortgage advisor with a 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’s 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 rates are dependent upon borrower’s credit collateral financial history and program availability at time of origination rates in terms are subject to change without notice. The Martini Mortgage Group at PCL financials the division of celebrity Home Loans NMLS 227765 with a branch address of 507 North London street, Raleigh, North Carolina 27604 You can contact certified mortgage advisor and producing branch manager kevin martini NMLS NUMBER 143962 by calling the branch and that number is 919-238-4934. For a full list and more licensing information, please visit www NMLS consumer access that or 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

home price expectation survey by raleigh mortgage broker kevin martini

Martini Mortgage Podcast Transcript of Episode 140

martini mortgage podcast raleigh mortgage lender kevin martini

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