Another Day, Another 20 Year High in Mortgage Rates, Zzzzzzzz

Mortgage rates continue to rise, reaching new 20-year highs last week at 7.37%. Yet, the record-high rates have not created the crash or panic that's been predicted non-stop for the past year.

Fascinating to me is that the real estate news is still pretending that rates have not yet hit 7%, although that number is inevitable at this point. since the numbers they are basing their reporting on are trailing reports that trail the market by 7-10 days or more and the current rate of 7.37% is already cooked.

A quick Google search of mortgage rates 7% shows almost all reports are that rates are APPROACHING 7%. Amazing..... all the usual suspects.

All that said, I don't have a crystal ball, so, what to do?

We still are getting exaggerated reports of drops in housing sales.

Here are the actual numbers, with our current sales rate of about 4.7 million for the year, down from the records of over 6 million during the pandemic period and 5.5 million or so immediately before.

Yet, at the same time, prices have risen by 40% on average, so the total sales are much higher.

At the same time, which homebuilders are caught with excess inventory in some overheated markets, the truth is that the number of new homes built has risen steadily over the past 10 years and has risen 6%, taking up much of the slack in the resale market.

So, sales are cooling off, not really declining. Inventory has remained stable, as sellers have enough equity to decide to delay selling rather than cut prices to avoid foreclosure as occurred in 2008/2009.

Yet, the news is relentless in talking about the market going down.

Here is the latest, proclaiming (you can almost feel the glee) "Home prices are finally falling. But how low will they go?"

So, let's break this down.

Finally, falling? Finally, as opposed to what? Finally, after CNN's wrong predictions for over a year perhaps?

Next, based on what. I mean, sales activity has declined, and home prices have fallen in a minority of markets, but overall prices have continued to rise, although at a slower rate. What is this based on?

Well, if you click on the article and read into it, in an almost throwaway line they say that home prices are predicted to go down by Goldman Sachs and Wells Fargo Bank over the next year or so. While that may be true, it is NOT true that "Home prices are finally falling." It might be that they WILL fall, but the headline is completely false.

Not only that but making financial decisions based on "predictions" from Goldman Sachs and Wells Fargo is like deciding which numbers to play based on advice from a Las Vegas casino. They have been consistently wrong over the past few years. These are the same people who insisted that the US government printing trillions of dollars would not cause inflation. 

But, again, my point is not who is better at predicting the future, but to show that the press is lying about what is happening now.
--
Bill Gross, The LAProbate Expert
I am a real estate broker in Los Angeles, CA focused on probate real estate and the leader of a team of over 1,100 agents nationally probate experts.

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