Here’s what you need to know:

Preparing for the September Fed Meeting

There’s been a lot of chatter about the Federal Reserve’s next steps. Are they gearing up to lower the federal funds rate? While the Fed doesn’t set mortgage rates directly, their actions significantly influence the broader economy, and in turn, mortgage rates. We’ll break down what to expect…

For the longest time as an entrepreneur and real estate investor, I always focused on how I could overcome obstacles. This mindset has certainly taken me far, and I’m not kidding when I say the biggest question I used to ask myself was, “How can I get this done?”

As many seasoned realtors will tell you, success in real estate hinges on a few critical factors: following up with clients, managing finances, focusing on lead generation, and being knowledgeable about the market. Yet, despite knowing these keys to success, an astounding 87% of real estate agents still fail. Why is that?

Here are some key things I consider when reviewing a seller’s disclosure, which many people often overlook:

Price Correction

In the world of real estate, the term “correction” doesn’t have a one-size-fits-all definition. In the stock market, a correction is typically a 10-20% drop. However, no experts are currently forecasting such a significant decline in home prices. Instead, the focus is on more nuanced trends.

One fun fact about me is that I used to play travel baseball from the age of nine to twelve, before the whole AAU circuit took over.

Each township had its own little league, and I was fortunate enough to be part of a fantastic team in Cheltenham.

Our team achieved something truly special by winning districts, marking the furthest any team in our league had gone at that time.

The township celebrated our victory in a way I’ll never forget: we were invited to the township building for a special ceremony, where we were honored with pins and medals.

It was a proud moment for all of us, and a testament to what can be achieved through teamwork and dedication.

If you’re from Cheltenham, a special shout-out to Old York Road Little League for being the foundation of these wonderful memories!

What’s Happening with Mortgage Rates?

Last week saw a lot of movement in mortgage rates, and we’re here to break it down for you. Here’s what you need to know:

Current Status & Future Outlook:

Right now, mortgage rates are dropping, which is fantastic news for those looking to buy a home. Lower rates mean more affordable home loans.

The Federal Reserve decided not to change the federal funds rate last week, but they hinted at a possible rate cut in September. This expectation is already influencing the market positively.

Impact on Home Buyers:

Affordability Boost: Lower mortgage rates mean lower monthly payments. For example, a $500,000 loan at the current 6.4% rate saves you over $350 per month compared to a few months ago.

Increased Inventory: More homes are available for sale now, giving buyers more options.

Market Reactions:

Unemployment Rates: The recent slight increase in unemployment has also played a role in the drop in mortgage rates.

Stock Market & Treasury Yields: The stock market and 10-year Treasury yields have been responding to these changes, further influencing mortgage rates.

Expert Insights

Mark Zandi: The Federal Reserve is likely to cut rates in September if inflation data supports it.

Sam Khater from Freddie Mac: Mortgage rates are at their lowest since early February, which is promising for the housing market.

Lawrence Yun: Lower mortgage rates and increased housing inventory might release pent-up demand in the market.

Expert Opinions: While we might not see the ultra-low rates of the past, experts predict rates could dip into the 5.5% to 6% range over the next year.

In recent weeks, you may have heard alarming predictions about an impending crash in housing prices similar to the 2008 financial crisis. However, let’s explore why the current market dynamics make a crash unlikely.

1. Homeowners Aren’t Selling in Droves

Unlike the period leading up to 2008, today’s homeowners are not selling their properties at a rate that would lead to an oversupply. Many locked in favorable mortgage rates during the pandemic, giving them little incentive to sell. This has resulted in a more stable housing supply.

2. New Home Construction is Lagging

New home construction has not kept pace with demand due to several factors:

Government regulations

Labor shortages

High material costs

Before the 2008 crash, there was a construction boom, which led to an excess of new homes. The current slower pace of new builds helps maintain a balance between supply and demand.

3. Low Rates of Distressed Properties

The rate of foreclosures and short sales is relatively low compared to the pre-2008 period. This is thanks to:

Government interventions

Mortgage forbearance programs

A generally healthier economy

In contrast, the 2008 crisis saw a high number of distressed properties flooding the market.

Current Market Dynamics

Undersupply of Homes: The fundamental issue in today’s market is an undersupply of homes relative to demand. This supports home prices and prevents a significant downturn.

Modest Inventory Growth: While there has been some growth in inventory, it is not nearly enough to tip the market into oversupply. This modest growth pales in comparison to the pent-up demand from buyers.

Favorable Mortgage Rates: Current mortgage rates, although higher than the pandemic lows, are still relatively favorable by historical standards, encouraging buyer activity.

Conclusion

The conditions that led to the 2008 housing crash were characterized by an oversupply of homes, high levels of speculative buying, and a significant number of distressed properties entering the market. Today, the market dynamics are fundamentally different, with a clear undersupply of homes and fewer distressed properties.

While fluctuations and corrections in home prices can occur, the structural factors that led to the Great Recession simply do not exist in today’s housing market. Therefore, a crash similar to 2008 is highly unlikely.

One question I often hear is, “Can being a real estate agent be a side job?” The answer is, it sure can, but you might not get the results you want. Allow me to share my personal experience.

When I first got my real estate license six years ago, my intention was primarily to benefit my investment properties. For years, I worked part-time in real estate while balancing other commitments. It wasn’t until about two years ago that I decided to dedicate full-time hours to my real estate career. As soon as I did, I began to see full-time results.

Think about it this way: how many successful professionals do you see who work part-time or on the side? There are very few. Most successful agents work on their business full-time.

There’s a saying that resonates deeply with me: “The man who tries to catch two rabbits ends up catching none.” This holds true in real estate. If you want to achieve significant success, you need to commit fully.

Real estate is a demanding field that requires dedication, time, and a lot of hard work. Balancing it as a side job might work for some, but if you aim for outstanding results, consider giving it the full-time attention it deserves.

One fun fact about me is that I used to play travel baseball from the age of nine to twelve, before the whole AAU circuit took over.

Each township had its own little league, and I was fortunate enough to be part of a fantastic team in Cheltenham.

Our team achieved something truly special by winning districts, marking the furthest any team in our league had gone at that time.

The township celebrated our victory in a way I’ll never forget: we were invited to the township building for a special ceremony, where we were honored with pins and medals.

It was a proud moment for all of us, and a testament to what can be achieved through teamwork and dedication.

If you’re from Cheltenham, a special shout-out to Old York Road Little League for being the foundation of these wonderful memories!