Hey everyone we kevin here it's time to talk about a real estate update and what's going on with foreclosures the credit quality of borrowers and what home buyers are thinking about, especially since mortgage interest rates have been going up, keep in mind, i have amazing programs on Building your wealth with real estate, investing and doing yourself, property management and rental renovations link down below. So you can learn how to save thousands, if not tens of thousands of dollars on your renovations and make sure you buy properties below market value check out those programs. In the links down below with a coupon code expiring shortly coming up on my birthday, all right folks, let's talk about this, so here's what we got right now we have foreclosures up 94 from a year ago, that's 19 500 filings in november of almost a double From a year ago, now keep in mind, we did have a lot of foreclosure bans in 2022. This data also lags again we're filming this here in january, and this data just came out for november 19, 500 in november.

That uh is actually down five percent from october, but that year, over year, number has some folks with well experiencing some heart palpitations over concerns that what if this means we're starting to see a potential inflection point in the real estate market? Could this be a sign that maybe the real estate market is starting to uh prepare to inflect downwards, especially with a change in interest rates which we'll talk about in just a moment? We'll take a look at this folks. If we jump on over to a sheet put together by atom of finance, we can see u.s foreclosure statistics and when we look at these we'll be able to see relatively, how are we doing with foreclosures, and here you go i'll, hide myself for a moment. So you can see here, foreclosures have been obviously spiked going into the financial crisis - 2008 2009 over here at the peak substantial decline in foreclosures after that. But look at this folks, even though we're seeing a double in foreclosures here from a year ago, we're still substantially below where we were with foreclosure filings previously during previous quarters, we would usually have foreclosure filing somewhere around the 90 000 foreclosure filings throughout the nation and Right now we are sitting at just 19 500 uh in november, and that's not only yeah up 94 from a year ago, but well well well down from previous storms substantially down.

I mean it's, maybe somewhere around 25 percent of previous norms of foreclosures and we're actually down from october. On top of that folks, we've got new data on the credit quality of borrowers, the uh and for relativity it's worth knowing the median credit score going into the great recession where we saw those foreclosure, spikes was 707. The median credit score right now is sitting at 780. So that's almost uh 70.

That's actually 74 points higher on a median credit score, so higher quality uh borrowers, potentially with less likely risk of default or a lower risk of default compared to what we saw going into the recession, which makes sense, especially since we had a lot of shady and Potentially unqualified borrower or lending practices leading to unqualified borrowers getting into homes going into the great financial crisis, not something that we're seeing right now, especially with dodd-frank and the ability to repay rules. Banks have been really tight on lending, and this is why we've seen the federal reserve's reverse repo market balloon with cash deposits, because banks just have too much of freaking cash and not enough borrowers. One of the reasons we don't have enough borrowers is because the housing market is still so tight and competitive that we're continuing to see real estate home prices actually tick up, which, if we go to the redfin data center, we can see what's going on with home Prices and we'll be able to compare this also to some of the recent inflection points that we've seen in interest rates. Now it's going to be too soon to determine what median sales prices are actually doing: relative uh to the current move in interest rates, but we'll speculate on that.

First, it's worth noting that usually we have a an annual decline in home prices. This is best visualized by making sure we turn on data for 2019, 18 and 17, and here you can see from the summer we usually have a trough and each of these three normal years here we had a trough in real estate data for sales prices, which Is the same thing that we saw happen up until september and october when home prices actually ticked back up to record highs now sitting at a median national average or median national sales price of 359 000 new listing of prices? Let's take a look at what people are asking for have started coming down, though - and this does follow the trend that we usually see where listing prices do come down, starting in september throughout the end of the year. So this is very, very typical right here, but what's incredible is that, even though the listing prices are following the annual trend of declining into the end of the year, sales prices are still up. This means things are more commonly selling, with probably multiple offers and above the listing price more regularly.

Now too soon to tell yet in terms of what's going to happen to real estate pricing, because of this folks take a look at this bump here in mortgage interest rates, you can see we've gone from about 3.08 percent here up about 0.2 percent to about 3.. Actually, almost 0.3, almost a third up to about 3.38 right now for a 30 year fixed rate mortgage if we zoom out at just uh one month here, rather than on the week view we can see that just a month ago, at the beginning of december, we Were able to get rates as low as 2.82 percent, so we've seen about a half percent movement on mortgage interest rates for the 30-year fix and since we know the rule of 10x, we know this could create a 5 headwind against real estate prices. Yet because of this increased credit quality, these substantially lower foreclosures and the fact that homes continue to sell with multiple offers above the asking price, as we referenced here, seeing that listing prices are going down, but closing prices are actually still either going up or maintaining. It's entirely possible that we could be in a real estate market.

That's appreciating at a rate of at least five percent per year. So, even though we have this five percent headwind, because interest rates went up about half percent which generally brings pricing down about five percent because we're seeing so much pressure, we might not see any decline at all. If we see a decline, it's probably expected to be nominal, especially since get this folks. Redfin's housing blog posted the following that in a survey of 1500 individuals currently looking to buy a home.

First of all, 12 benefited from putting together a down payment by investing in cryptocurrencies, but more interestingly, that more of a tangent 47 of house hunters in response to how they feel or how they think they will feel if mortgage rates continue to rise and potentially rise. Above 3.5 percent, 47 percent of house hunters say they'd feel quote more urgency to buy a home if mortgage rates rose above 3.5. In other words, the people right now. Waiting for a deal would be more interested in just buying something.

If rates go above 3.5 because they believe that maybe interest rates will keep going higher uh in the future and that they'd rather buy something now to lock in a lower rate, in other words, as usual, don't wait to buy real estate, buy real estate and wait There are a lot of folks speculating right now that maybe, if you waited to buy interest rates, went up, we might actually see home prices come down and you'd have an opportunity to buy housing cheaper. Even though you'd have a higher interest rate, which you in theory, you could always refinance in the future, assuming market conditions, favored, you uh and and when and what you bought. But folks i mean based on what we're seeing here in surveys. It actually seems like, if rates go above 3.5, more people are going to be more excited to buy, which is kind of the opposite of what we're expecting we're.

Not seeing prices fall, which seasonally we do we're not seeing higher foreclosures we're at one-fourth of the levels we previously were. Credit quality is at substantially high levels way higher than recession levels. Now one downside is, we are seeing rents come in a little bit lower than expected. Multi the multi-family housing council showed that only 92 percent of rents were collected in december 2021, that's down from 94.9 percent in july and down from 93.1 in november.

So a little bit of a movement down there on rents collected but beyond that. There's not really a lot negative to say about the real estate market and it doesn't look like we're really setting up for any kind of real estate crash or some substantial discounts. Because of the rate movement that we're seeing, obviously we'll keep monitoring this closely, but this is the latest on housing. If you found this video helpful consider sharing the video check out the programs on building your wealth through real estate link down below.

It's also a course for real estate agents, making youtube videos investing in real estate, so zero to millionaire real estate. Investing and, of course, once you're in real estate. The property management and do-it-yourself rental renovations course so that you know where to spend money and where not to spend money all right. Folks, thanks for watching and we'll see you in the next one thanks goodbye.