Is the American Dream Now a Luxury? 💎 Find Out Why

Is it just me, or are we all still feeling a bit let down by the Jake Paul vs. Mike Tyson on Friday?

What an underwhelming “fight” that was 🥱

But don't worry, I’ve got something much more exciting lined up—let's jump into this week's mortgage update! 💪💪

Read time: ~4 minutes

Rates ended FLAT compared to last week, and volatility was HIGH. Rates are in the high 6’s/low 7’s for most loan types without paying discount points. Paying discount points can get you in the low to mid 6’s.

CPI Ticks Higher, But Relief Could Be on the Horizon

Wednesday’s CPI report had a buildup that felt like the hype before a Jake Paul vs. Mike Tyson fight. And much like the fight, it delivered more anticipation than action.

For October, headline inflation came in at 2.6%, a slight increase from September’s 2.4%. Core inflation (excluding food and energy) stayed steady at 3.3%. The modest bump in headline inflation was largely driven by shelter costs, which rose by 0.4%. However, it’s worth noting that shelter inflation tends to lag because rents are typically locked in annually, not monthly.

So, while the October CPI showed a minor increase, there’s reason to believe the Fed can still bring inflation down to its 2% target by the first half of 2025.

Why is that?

It all comes down to the “base effect.” Essentially, annual inflation calculations replace data from the same month a year prior. For October, a small 0.2% increase replaced last year’s 0.1%, nudging annual CPI from 2.4% to 2.6%.

But looking ahead to early 2025, some much higher monthly figures from early 2024 will roll out of the annual calculation. If monthly inflation remains steady at 0.2%, we’re on track to hit the Fed’s 2% target by April 2025.

Is Buying a Home Now a Luxury? 💎

First-time homebuyers are facing unprecedented challenges, now representing the smallest share of the market in more than four decades.

According to the latest report from the National Association of Realtors (NAR), first-time buyers account for just 24% of home purchases, a sharp drop from 32% last year. For perspective, in 2010, first-time buyers made up half of the market. This dramatic decline underscores how difficult the housing market has become for new buyers 🤢.

Another sign of the changing landscape? Homebuyers are getting older. The average age of a homebuyer has jumped dramatically to 56 (up from 49 last year). For first-time buyers, the average age is now 38, compared to 35 just a year ago.

Why the shift? First-time buyers are struggling with soaring home prices, high interest rates, and limited inventory across most markets. These challenges make it harder for many to establish the financial security that homeownership typically provides.

The American Dream Has Become a Luxury 💎💎

$4,442,050—that’s the price tag on the American Dream today. 😭

I will let that number settle in—it's a stark reality for today’s housing market.

Simplifying Open House Changes for Everyone

As of August 17, 2024, a new rule requires buyers to sign written agreements before touring homes with a real estate agent. But what happens if someone just wants to pop into an open house?

To make this clear for everyone, I've created an easy-to-understand explanation based on NAR guidelines. If it's simple enough for a fifth-grader, hopefully it will be straightforward for your clients too:

Two Ways My Team & I Can Help

1. Lets collaborate- Schedule a zoom meeting

2. Tough Deal? Let us know if we can help