Staggering numbers

It’s not an exaggeration to say that every real estate agent who works in this country is sitting on a goldmine. As you’ll see in our second story, the total value of the U.S. housing market is on the verge of reaching $50 trillion dollars. That is not a typo!

Just one year ago, there were only four areas where the total value of homes topped $1 trillion. Now there are EIGHT. Those are staggering numbers and truly staggering growth.

We hope this type of information gets you motivated. It shows the massive potential for what’s out there in the market, and why we are so lucky to work in this industry.

Now with mortgage rates dropping, there’s even more potential out there, so let’s go and grab it!

– James and David

Mortgage refinance demand jumps

Applications to refinance a home loan, which are most sensitive to weekly rate changes, jumped 16% week-over-week and were 59% higher than the same week one year ago, according to CNBC. Here’s what else the network reports:

• Applications for a mortgage to purchase a home increased 1% week-over-week but were still 11% lower than the same week one year ago

• Total mortgage application volume rose 6.9% week-over-week and reached its highest level since January

• There are about less than 1 million borrowers who can benefit from a refinance at the current rate and shave at least 0.75% off their contract rate.

• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) is now 6.63%, up 0.29% from Monday

Our take

No surprise here. With mortgage interest rates dropping last week to their lowest level since May 2023, we expected a surge in mortgage demand from homebuyers and especially from current homeowners. Rates might not fall below the 6% threshold this month, but expect them to fall once the Fed cuts interest rates in September. And that’s just the start. We anticipate mortgage rates to drop throughout the rest of the year and into next year as well. Prepare your clients, specifically your potential buyers, for this opportunity.

U.S. housing market nears $50 trillion in value

The total value of U.S. homes gained $3.1 trillion (a 6.6% jump) over the past 12 months to reach a record $49.6 trillion. This number has more than doubled in the past decade, climbing nearly 120% from $22.7 trillion in June 2014. That’s according to Redfin’s analysis of more than 95 million U.S. residential properties. 

Here are the metros with the fastest-growing total home value:

Our take

As we told you up top, the United States housing market is truly an amazing thing. There are now eight trillion-dollar metros, up from four only a year ago. Chicago, Phoenix, Washington, D.C., and Anaheim, CA have joined the list of areas where the total value of homes tops $1 trillion. Three factors are contributing to this surge: 1) home values are increasing because demand is still outpacing supply 2) home inventory levels are remaining low compared to pre-pandemic levels and 3) new construction is propelling market valuations to rise ever higher. Our analysis shows none of these trends ending anytime soon. 

Boost Your Real Estate Success with Homes.com

Your Listing, Your Lead

Over 100 Million buyers uses Homes.com, the fastest growing home search site. Put your best profile forward with a Homes Pro membership—amplifying your real estate brand with premium tools, priority visibility, and enhanced exposure across the internet with Homes.com.

[Signup Today!]

Metros with more housing stock than before the pandemic

Nationwide, homebuyers have fewer homes to choose from than before the pandemic, despite active listings jumping by more than 36% nationwide in July. However, there are some markets bucking the trend. 12 of the top 50 largest metros saw higher inventory levels compared with typical July levels in 2017 through 2019.

These are those 12 metros and their inventory jumps compared with pre-pandemic levels:

1. Austin, TX: +35.5%

2. San Antonio, TX: +34.3%

3. Denver, CO: +26.7%

4. Tampa, FL: +18.8%

5. New Orleans, LA: +13.9%

6. Dallas, TX: +12.7%

7. Nashville, TN: +12.6%

8. Orlando, FL: +12.5%

9. San Francisco, CA: +10.0%

10. Jacksonville, FL: +7.5%

11. Seattle, WA: +7.4%

12. Memphis, TN: +4.1%

Our take

This is excellent news for the homebuyers in these metros. More listings means more choice, more time on time on market, and, possibly, more price cuts for homebuyers. We want to draw your attention to one aspect of this list–7 of the metros are either in Texas, Florida, or Tennessee. It’s no wonder why these states are seeing massive inflows of in-migration from across the country. They strongly encourage residential construction. We are glad the word is getting out about the need to build more homes, but it needs to go even further. Encouraging residential construction is one of the best things any government can do for its economy. We’ve said it before and we’ll say it again: build, baby, build!

The news that just missed the cut

• What's happened to real estate commissions since the big settlement

• Office demand improves as the sector sees potential bottom

• Americans are abandoning megamansions for smaller spaces

• How this agent is getting hundreds of leads

• Ranking the real estate shows currently on Netflix

Foundation Plans

Advice from James and David to win the day

Today, we complete our two-part series answering the biggest questions regarding refinancing. You can read part one here. With mortgage rates dropping to their lowest level in more than a year, it’s time for your clients to capitalize. Here are some important questions your clients should consider before they refinance:

Does refinancing hurt credit scores? –  Refinancing a mortgage could knock your client’s credit score down a bit since they’re applying for a new loan. This means lenders will conduct hard credit inquiries to check the credit report, which could stay on their report for up to two years. However, a hard credit inquiry doesn’t impact credit scores for the full two years. If your clients continue to make payments on time, refinancing could actually help their score in the long run.

Do your clients have to put 20% down to refinance? –  No, your clients don’t need to come up with a 20% down payment to refinance a mortgage. They usually only need 20% equity with a cash-out refinance. However, they’ll probably have to pay closing costs, which they should factor into their refinancing budget. Depending on the lender, your clients may be able to roll these closing costs into the mortgage to avoid paying them all upfront. According to Freddie Mac, the average mortgage refinance closing costs are around $5,000, but this number could vary depending on the size of the loan and where your clients live.

What is the negative side of refinancing? – If your client refinances from a 30-year mortgage to a 15-year one, their monthly payments will probably increase since they have less time to pay off their loan. While a cash-out refinance lets them borrow against the equity in their home, borrowing that money also means they’re reducing their equity. Closing costs can also be pretty steep, which could cancel out the benefits of refinancing a mortgage, especially if your clients move before reaching their break-even point.

To dive even deeper into the subject, use this resource.

To learn more about Estate Media, visit their website.

Just in Case

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

“The distance between dreams and reality is called discipline.” — Paulo Coelho

Strive to make your dreams come true friends. Stay focused and execute! Thanks for reading. We’ll see you back here on Tuesday!

– James and David