Mon, 22 May 2023
Jason hosts Rick Sharga from C.J. Patrick Company who spoke about the current state of the economy and housing market. They discussed the cause of the resilience of the housing market despite 10 consecutive massive rate hikes. Rick stated that this is due to the large cohort of young adults currently coming of age and forming households, and the fact that people like having a roof over their head. They concluded that despite the rate hikes, the housing market is doing well.
Rick discussed how demographics and the Fed funds rate increase have affected the housing market. He noted that in 2021, mortgage rates had doubled in a calendar year for the first time in history, leading to a higher cost of monthly payments for home buyers. He also mentioned how 70% of homeowners have mortgage rates of 4% or lower, which means they are not in a hurry to take on a higher rate. This is keeping inventory levels low, combined with growing demand, and causing prices to remain stable.
He also noted how this is frustrating those who predicted a housing market crash. Rick Sharga and Jason Hartman discuss the current foreclosure rate, which is about half of the normal rate. They state that 93% of borrowers who are in foreclosure have positive equity. Of those 270,000 borrowers in foreclosure, 100,000 of them have 20-50% equity, 60,000 have more than 50% equity, and 20,000 have more than 75% equity.
They also discuss the current state of the housing market. Mortgage rates have been increasing, but they seem to be stabilizing in a band between 6.25% and 6.75%. Existing home sales, inventory levels, new home sales, and rental pricing are all up from last year. Investor activity is also up. The Fed indicated at their last meeting that rates will remain stable until June.
1:17 Crash bros are just wrong
2:57 In Nashville, inventory is super low; awesome financing offers
Rick Sharga interview Part 1
4:47 Welcome Rick Sharga, first time mortgage rates doubled in a calendar year
8:17 Foreclosure issues
11:39 Primary Mortgage Market Survey
17:40 Higher rates have crushed affordability
18:25 Purchase loan apps off 35% from prior year
20:36 Existing home sales down from February - and 22% below last year
23:07 Inventory increases in April, but new listings down significantly
23:41 New home sales improving as builders offer incentives
24:29 Inventory coming to market slowly, and selling quickly; disruptive technology & other issues
29:04 The current problems with multifamily housing
30:38 Price appreciation has declined rapidly
31:08 Most regions are still positive year over year
33:31 Most states saw prices increase in March
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