Another wild week

If you’re like us, we’re sure you have been monitoring the news very closely this week, and all the fallout and uncertainty surrounding the tariff situation. Below, we’ll give you a quick recap of how this has affected the overall economy and what it could mean for the future.

But we do have some good news! In our second story, we cover the hot streak that the luxury market has now been on for nearly two years. We explain why there’s a significant chance that we can see even more growth in this sector.

And finally, while we know there is tremendous uncertainty out there, our third story is a good reminder of how homeowners are in a good position to weather any potential storm.

As usual, we think is all great information to share with your clients and show that you’re not only connected to what’s going on in real estate, but the economy as a whole.

And now… let’s get into today’s Blueprint!

– James and David

Tariff uncertainty drives mortgage rate & bond market volatility

Last Friday, the average rate on the 30-year fixed loan plunged 12 basis points to 6.63%, the lowest level for 2025 according to Mortgage News Daily (MND). As a result, total mortgage application volume jumped 20% to its highest level since September 2024, and mortgage refinance demand surged by 35% in one week. 

By Tuesday afternoon, however, rates had spiked to 6.85%. The movement was referred to by MND as the “worst 24 hours for rates so far.” Currently, the rate for the 30-year fixed mortgage is 6.97%.

Mortgage rates have spiked so quickly because of volatility in the bond market. As recently as last week, the yield on the 10-year bond was below 3.91%. But just before the announcement of the 90-day pause on tariffs, they had risen to 4.51%. Even more astoundingly, the US 30-year Treasury yield posted the biggest weekly increase since 1982. It is currently 4.88%.

Our take

Normally, when stocks tumble, bond yields fall too, as investors seek safety in U.S. Treasuries. That’s what we saw at first last week. But as uncertainty around the administration’s tariff policy grew, that’s not what happened. Instead of piling into U.S. bonds, many investors turned to alternatives like German bonds. The reasons for the shift are up for debate. China and Japan, the two largest foreign holders of U.S. Treasuries, are now facing steep tariffs, and they may be trimming their holdings in response. More concerning though is the possibility that global investors are beginning to question whether the U.S. still qualifies as a reliable safe haven. If that sentiment gains traction, we could see bond yields — and mortgage rates — continue to spike. We're not there yet, but it’s a risk we can’t ignore.

Luxury home market is fastest-growing sales segment

For 21 straight months, million-dollar-plus homes have outperformed the rest of the market, making it the fastest-growing sales segment. The share of luxury home sales has gone up from just 5% in February 2023 to now 7.6% of all sales. That’s according to Realtor.com’s latest update. Here are the key takeaways from their report.

• Time on market ticked down slightly from 76 days to 75 days for high-end homes, while rising from 58 days to 64 days for sub-$1 million properties.

• Price reductions have remained steady for high-end properties, hovering between 13% and 13.6%, while price reductions for sub-$1 million homes have increased from 20.8% to 22.6%.

• Million-dollar-plus listings have shrunk as a share of for-sale properties, dropping from 13.6% in 2024 to 12.6% in 2025.

• At $48.1 trillion, the total value of household real estate was at the third-highest level ever recorded.

Our take

This is all good news. Demand for luxury homes is high and the value of luxe homes is staying high too. Still, we believe there’s room for further growth, particularly among the wealthiest households. As of late 2024, real estate made up just 18.7% of total assets held by the top 10% of households, down from 19.9% two years earlier. In other words, even with recent gains in property values, real estate became a smaller slice of the average portfolio for this group. Meanwhile, corporate equities and mutual fund shares accounted for 36.3% of their assets, the highest share ever recorded. This combination of stock market wealth and relatively low exposure to real estate suggests there’s still significant potential for luxury property investment among the wealthiest buyers.

Markets with high homeowner equity

Between March 2020 and June 2022, home prices jumped by 43%. As a result, many homeowners today hold significant equity in their homes. Using loan-to-value (LTV) data from BatchService, ResiClub has calculated both the national average and state-level LTV percentages across the country.

For reference, a home’s loan-to-value ratio compares the size of the mortgage to the home’s appraised value (or purchase price, whichever is lower). For example, if a home is valued at $400,000, the buyer puts down $80,000, and the loan is $320,000, the LTV is 80%, meaning the homeowner has 20% equity. In general, the lower the LTV percentage, the better, because the homeowner is in a stronger equity position.

The LTV percentage nationwide is 62.2%. Here are the top 5 states with the lowest LTV percentages:

1. South Dakota: 48.8%

2. New York: 53.8%

3. Idaho: 54.7%

4. Maine: 57.1%

5. Nevada: 57.2%

Our take

We’re highlighting this study because of the growing concern that a recession could hit later this year. If that happens, the more equity homeowners have, the better positioned they’ll be to weather the storm. As ResiClub points out, even if home values were to drop by 10%, most homeowners would still be in strong financial shape. Now we know a lot of firms use different models to calculate data. We like this one from BatchService because they used a more conservative approach to calculating loan-to-value (and, by extension, home equity) than the one typically used by the FHFA. Yet even with those stricter assumptions, the numbers suggest homeowners are in a solid position. That’s a helpful stat to share with your clients to give them a little peace of mind.

The news that just missed the cut

• What a recession could mean for the housing market 

• Real estate vs Stock market: What is the better investment

• Why the suburban Southwest is the “new Florida”

• Zillow’s new listing policy: Bans off-MLS marketed properties

• Avoid these mistakes that cost agents the listing

Foundation Plans

Advice from James and David to win the day

Buyers are experiencing a resurgence of negotiating power in the majority of markets right now, but that doesn’t mean they won’t encounter financial hurdles during the purchasing process. Today, we’d like to give you some tips on how to help your buyers when they run into these hurdles:

Down payment or closing cost issues – If a buyer is short on their down payment, there are options. First, find out exactly how much the lender requires, and see if it would help for the buyer to switch to a different loan product. Ask if it is possible to use gift funds to make up the difference. Sometimes, borrowers can cash out an investment account, 401k or another account to build up their down payment. They could also get a co-signer and solve the problem. That’s not all. Check to see if your buyer qualifies for any of these down payment assistance programs.  

Debt-to-income ratio issues –  Encourage buyers to pay down debts and not take on any new debt until after closing. Typically, the total debt-to-income ratio should be 36% or less, and the total housing expense should be 28% or less. If your buyer has a high DTI, several strategies could help lower it. The buyer could pay off a credit card / student loan / car loan / etc. Find out if the loan has to be paid off or just paid down. Ask the lender if a different loan product would require a different ratio. If your buyer is self-employed, their DTI is based on their post-tax or net income, not their pre-tax or gross income. Because many self-employed individuals take a lot of business deductions to reduce their tax burden, they often wind up with a low taxable income. Consequently, they should consider taking fewer deductions to increase their net income. This may result in a higher tax burden, but it can make qualifying for a mortgage easier. 

Credit score issues – These issues need to be dealt with at the very start of the homebuying process. They come in two forms: low scores or a specifically damaging item like a tax lien or a recent default. Find out which one you are dealing with. If the buyer’s score is too low — by about 15 points or less — it is probably fixable with a few easy remedies. Ask the buyers to use Experian.com to update their credit and correct errors. They can use Experian Boost to improve scores. If the buyer’s credit score is too low for the loan product, the borrower might need to switch to an FHA or a more lenient type of mortgage.

As you can see, this is a big topic. We’ve only begun to scratch the surface. It’s so important that agents know all the options out there. Start here and here to learn more.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“Your time is limited, so don’t waste it living someone else’s life.” – Steve Jobs

Remember: each day is a gift and a new opportunity to live your life and become the person you want to be. The mistakes and missteps you’ve made in the past don’t define you. Live as intentionally as you can and be ruthlessly focused on the goals you’ve set out to achieve. 

Have a fantastic weekend, and we’ll see you back on Tuesday!

– James and David