 Why are 5.5 million homes in the US vacant right this second? And how is that affecting the housing market? Also, why did three of the largest trade organizations in the real estate industry just issue a letter, a joint letter to the Fed about interest rates? What's that all about? I want to dig into that and new listings are on the rise. We're seeing a massive uptick in new listings, how big of an uptick and how is that affecting active listings? It's Ricky Karuth and this is your weekly real estate update video. I'm going to dive into all of this stuff. I'm going to screen share and I'm going to show you all the back end data so that you're fully in forward moving forward, whether you're buying a house, selling a house, real estate agent, real estate investor, whatever you're doing. This is everything real estate. So let's dive right into it. First off, interest rates today. We're looking at 7.6. Now, this is quite a drop because we were just, just, I'm talking about last week, late last week, we were just at 7.82 and some change, almost 7.9. So we were teetering up there to 8% and honestly, there were a lot of lenders around the country quoting 8% plus on some loans. What are the chances that the feds increase their rate again? Okay, this is Barron's and excuse me, my voice is still recovering, but I'm in the game. I just interviewed Grant Cardone for an hour and a half. So that probably didn't help. That video and interview will be out tomorrow. So be on the lookout for that. But Barron's here says the odds increase. Okay, the odds have increased for another Fed hike this year. Okay. And that's due to a stronger than expected September's jobs report. Okay. The Fed futures have penciled in a 24% chance of a rate hike in the November meeting. Okay. That's up from 20%. So it was a 20% chance. Now it's a 24% chance that they, that they have another hike in November. Okay. But what about December? All right. The odds of at least one more rate hike by December. So that, I guess that's collectively by December, meaning at some point, either November or December have jumped to more than 46%. That's up from 33% a day ago. This has everything to do with the jobs report. Okay. Friday jobs report suggests that the labor remain or market remains very strong and cements the case for additional Fed rate hike this year and also likely delays the pace of eventual rate cuts. All right. So that jobs report look pretty solid and that's causing barons and that's causing the people that figure out all these odds that there's a more likely chance than it was that they're going to raise another, you know, quarter point whatever by the end of the year. Now it's still at 24 and 46%. It's not over 50%. Although the fact that they might make another rate hike before the end of the year is up considerably from 33 to 46. So we'll have to kind of see how this whole thing plays out. Now this letter that was written by the Mortgage Bankers Association, the National Association of Home Builders and NAR, the National Association of Realtors, they all three of these, the largest trade organizations in the industry got together and wrote this letter. All right. It says all of their names at the top and wrote this letter to the Feds about this exact subject. So I want to dive into that in just a second. I want to talk about these five million homes that are vacant on the market right now. So here we go. We've got these five million vacant homes. Okay. While the US grapples grapples with the housing shortage. All right. And the real deal called this a housing crisis within a housing crisis. All right. So when you dig into the data here, all right, when I read this article, okay, the first thing I realized, I want to know where data comes from. Right. And so, you know, it's real easy because the articles always say where they got the data and everything like that. Right. Um, but this was from Lending Tree. Okay. Analysis of the 2022 American Community Survey by Lending Tree has unveiled a perplexing phenomenon in the US and an estimated 5.5, a perplexing phenomenon is how they describe this. An estimated 5.5 million vacant housing units in the nation's 50 largest metro areas, amounting to about 8% of housing, uh, vacancy rates. All right. And so if you dig down a little deeper here, it's all, it breaks it down. Okay. About 26.6% of these homes are empty because they are available for rent. Okay. So 26.6, which is the biggest group of this 5.5 million are available for rent. So it's not like they're sitting there. They're labeled to be rented any second. And I looked at the numbers of this and this, this number is not crazy. This is nothing crazy. It's actually kind of back to pre pandemic levels, if you will, in terms of the number of homes that are kind of in the middle of renters, whatever the case may be, 17% remain vacant as they are only used part time. So vacation, second homes, um, you know, you know, second homes, absentee owners basically, um, these people use them every once in a while. They don't rent them out. So 17% remain vacant due to the fact that that's their vacation home and another 8% are in the state of repair or renovation. Okay. Which means they're being fixed up to either be rented or moved into. Okay. So it's nothing crazy. All right. Now what I did is I went to lending tree and I found the article right here, nearly 5.5 million homes are vacant in the, in the U S. Okay. And you scroll down and it actually breaks down the, you know, where these places are. The number one was New Orleans. Okay. The most common reason for vacancy housing for rent. All right. Number two is Miami. Okay. Number one reason housing unit is for seasonal recreational or occasional use, which means that's where a lot of second homes are. Okay. Number three was Tampa, Florida. So two of the top three are in Tampa, Florida. Same thing. Second home, vacation properties. All right. So I looked at this and I said, okay, let me dig deeper. And I found this article, right? And this goes back. So you can see the date here was October 2nd. Just, you know, last week you go here and we go back to March 2022. Okay. Now year and a half ago, year and a half ago, we're sitting on 16 million homes vacant in the U S. So we're actually down in the number of vacant homes in the U S over 60% right this second. So I did, I dig down a little bit into this and I read this entire article and what do I find according to the new research from who else, but lending tree. So this kind of, this, this, that now I'm starting to see a pattern here. This goes together. They, they're using the same company, you know, surveying this to learn this data as they did, you know, here's some articles showing that the same company did the data last year, year and a half ago when there were 16 million homes vacant. So I found that article. I pulled that up and here we go right here from lending tree, direct from the source. 16 million homes are vacant in the U S right here, all the states. And you know, just a little side note that number one, two and three are Vermont, Maine and Alaska. If you look at this map, Florida was number six on the states. So it moved up to number one, I'm sure since, since this, you know, time a year and a half ago. Let's see, Louisiana was number nine. So what I'm saying is this, and I want to move on to the letter from the mortgage bankers association and all the other trade companies. I want to get into the just raw data from Redfin in terms of new listings hitting the market, you know, that spike that we're seeing, what it's doing to the rest of the data in terms of active listings, prices, et cetera. But my point here with this is that I haven't heard it yet, but I did hear something I want to say maybe a year ago from one of the YouTubers about 14 million homes vacant and how if only 5% of the vacant homes hit the market, we'd be in trouble. So you do the calculations, that's 700,000 properties. And at the time, we, which we have about the same amount. Now we had about 500 to 600,000 active, you know, listings that aren't pending. If you added 700 to it, it would be at 1.2, which is where we were pre-pandemic. So it just kind of gets us back to normal. Now it gets us back to normal in a different environment with, you know, 7 to 8% mortgage rates and, you know, higher prices. So not saying it's apples to apples and that, oh, we'll be just fine because, you know, that's where we were pre-pandemic. I'm not that delusional. I might be a little delusional, but I'm not that delusional. But the fact is that was a year ago. And guess what? That did not happen. Okay. A lot of the fear-mongering, let's call it, when it comes to the housing market, they take these situations like the Airbnb situation. For example, what's happened there? I mean, well, that was about six months ago now, nothing has come of it. There's a million Airbnbs in the country. Everybody was saying, oh, you know, this is going to be the crash. And they're acting like this is going to make it a 2008 crash. A 2008, you know, from this, from the Airbnb situation. No, not at all. I said it when it came out when Robert Kiyosaki said it and several other, you know, influencers about the Airbnbs that are going to crash the market. Prices are going to plummet. This is it. This is the end. Um, there's always something. Um, anyway, this is just another possibility that we'll see that people are going to spin into, this is going to be the end, right? And it's never going to be the end. That's the thing. Prices continue. What they may go up. They may go down. Heck, if prices go down 20%, that'd be a good thing. If prices go up 20%, it's not a bad thing either, especially if you own properties, are we slowly pricing out people of the market? Yes. And that's the huge negative that we see here. What are those people going to do? They're going to go rent. They're going to go rent somewhere to live if they can't afford it. And then they're going to build up their resources to be able to go by if that's in fact what they want to do. Um, I'm not happy with the way affordability is going. And I'm not happy with the direction that I see it going. Cause honestly, I think it's going to get worse. I don't think it's going to get better. Now let's move over to this letter. We've got mortgage rates at 7.6. We've got the odds have increased that we're going to see another rake height this year. Okay. And then broke agent media did a really good job here of breaking down this letter. So shout out to broke agent media. Um, basically MBA mortgage banks association are national association realtors and NAHB, the national association of home builders wrote a letter to Fed Chairman Jerome Powell urging the Fed to take steps to provide market certainty. Right. And I think that's the big thing right now. We don't have a lot of certainty. We don't know where we have no idea where everything's going. I do say that if we could just let, just let this thing play out, I don't think we're being patient enough here. Um, just let it play out. I think that we're going to see some light in the tunnel here, but I don't blame these trade organizations for coming out and, and saying what they said here in the letter, it needs to be addressed. It needs to come from them. So kudos to these trade organizations, but basically in a nutshell, they're saying, Hey, housing is unaffordable, unaffordable. Okay. Um, we need to do something about it. Okay. We need to have more clarity and less uncertainty. Okay. Why is that important? Why is uncertainty? Why is clarity important? Well, it's important because of the spread. Okay. The spread between the 10 year treasury and mortgage rates. Okay. Right now it's around 3% 300 basis points. It's been fluctuating. You know, it got up to, you know, above 310 basis points. And right now it's at 299 basis points as up to day. That's the spread between the 10 year treasury, which was always lower than the 30 year fixed mortgage rate. And that spread is normally one and a half to 2%. You know, 1.75, 1.8, you know, historically. And so that spread of one and a half to 2% is not there. It's twice that. It's 3% right this second. And they address this in the letter. And the reason why the spread is the way it is, is because of the uncertainty. Right. It's because of the uncertainty in the market. It's going to trade on the future of the Fed rate. Okay. The 10 year, excuse me, that spread is going to trade on the future of what they believe, what direction we're going in. As soon as the Fed makes a determination that we are done raising rates, we're going to see relief in just the spread. The 10 year treasury might stay the same, but we'll see relief in the spread itself because there's a little more certainty. And so we'll see some relief there as soon as the Fed says, I'm done. And then as we move forward and we get to an eventual rate cut, which there's odds there that that's expected to happen in June, July of next year. You know, we're going to see the 10 year treasury start to get better and better. And so it's a process. But right now they're worried about this spread and the spread is caused by uncertainty. And so they said in the letter here, they said, one of the most alarming consequences of this uncertainty is the significant gap between the 30 year fixed mortgage rates and the 10 year treasury yield. Right. As a result, prospective homebuyers across the country are facing mortgage rates that are at least 120 basis points higher than they typically would be. For homebuyers, that difference results in hundreds of dollars a month, making it difficult to imagine a path forward if rates continue to rise. Okay. The uncertainty induced mortgage to treasury spread, okay, is costing today's homebuyer an extra $245 in monthly payments on a standard $300,000 mortgage. So what they're saying is, is if we had certainty and that spread was normal, then mortgage payments will be about 250 bucks less than what they are now. And I agree with them 100%. They propose solution here on affordable housing, I guess, is the homebuilder stepping in saying, hey, we'll come in and we'll, we'll, you know, we'll build more affordable housing. And so they had some clear demands here. Okay. So these three organizations urged the Fed to make two clear statements to the market. The Fed does not contemplate further rake heights. They're like, please, you know, tell the public that you're done. And the Fed will not sell any of its MBSs, which is mortgage-backed securities holdings until and unless the housing finance market has stabilized and the mortgage to treasury spreads have normalized, because that's another factor in all this, what, what the Fed does with the mortgage-backed securities. So, yeah, and, and here is the actual letter right here, right? It's kind of small, blow it up a little bit. You can't really see it on there, but, but here, here's the actual letter right here. So, yeah, hey, it's completely understandable. I, you know, I appreciate the three organizations getting together, working together to send something to the Fed like this saying, hey, we need some certainty here. Again, I feel like letting this play out that, you know, the Fed's not certain about what they're going to, that's why they can't be certain, because they don't know. They're still trying to figure this whole thing out. You know, shelter costs was up 7.2% when the Consumer Price Index was a 3-point-something, you know, real estate and shelter costs accounted for a good 90% of the inflation. So, this is a tough subject. This is a very tough subject, especially to wrap your head around it. To understand how to manipulate, because that's what we're trying to do here, manipulate the system when it comes to inflation and mortgage rates and affordability and everything above. So, we'll have to see how all this all plays out. I'm going to keep you informed, of course, so make sure you're subscribed. Shoot me a comment. Let me know what you think, and let's dive into this, this housing data from Redfinn. We've got new listings here, new listings are here, right? New listings are here, right? And we got to where it was like down a good 26%. Looks like it was a high 26% year over year new listings hitting the market. And that was back in June, July, and it has steadily called up. And now we're literally 3.4%, 3.4% year over year. Now, last year, of course, was low. So, it's not like, that's not saying anything, okay? It's like foreclosures were, you know, whatever. Let's just say, you know, two years ago, there were 104 closures. And then, you know, now we got 150 and we saw articles that was like, foreclosures up 50%. It was like, we got 50 more. We had basically none last year. So, you know, or like if you had four and then now you got 12, they're like, foreclosures up 300%. It's like, it's 12. Calm down. It's kind of the same thing here. You know, getting caught up to last year is nothing to brag about. It's not like, you know, the market's getting flooded by any means, okay? But how does this, how does this, you know, move the needle in other aspects of data? So, let's look at active listings. So, we see that new listings are, you know, hit a low and now they're just catching up to where we were, you know, last year. And then maybe we'll see if it doesn't even catch up with the year before. When it comes to active listings, we're still, we're still low. Now, we're not as low as we were. We got down to 15, almost 16%. And now we're at 13 to 14%. So, it's caught up a little bit, but not as quickly as new listings. Now, why is that? Well, that's because the people that are selling their house are also buying a house, so it's taken a house off the market. You know, that's why we're seeing like, you know, listings getting caught up to next year, but active listings aren't really budging that much. That's because a lot of these people are moving because they have to, because job-related or whatever the case may be, they're selling one and they're buying one, so it's taking a home off the market. Let's look at prices. So, right here, right about here, I was like, man, we're going to go positive year over year because of this wall that 2022 put up. Then about right here, I said, wow, well, not only are we going to go bust through the wall, I think we're going to go, we're going to hit all-time new highs, which you can't see it right here. The blue line never really got above the peak of 2022, but we are at all-time highs for this time of year. And if you look at Kay Schiller and some of the other ones, Zillow, realtor.com, you'll see that they say we are all-time highs. But, you know, you can see 2021, remember the year of the boom, right? It came up, it peaked out about, you know, 343, and then it went down to 337. Now, people don't know that. People don't realize that in the year of the boom, the strongest, craziest market we've ever seen, I mean, the velocity, the intensity of 2021 was way more than 2003 and four, right? I was an agent back then as well. And this was a different, this was way more violent, I'm going to call it. And even in that, that the most violent market that we've ever seen in the US, prices are still seasonal. They still dropped in the fall like they always do. Isn't that amazing? And if you guys remember the ones that were in the business back then, you couldn't have a, you couldn't hold a listing. You got a listing, you got 13 offers, 20 offers, 30 offers, 100,000, more than asking price, so on and so forth. It was nuts. It was, it was insane. Well, damn, the median sales price went down, you know, in the fall as it does every year, it's seasonal. And then it picked back up, it started out low, just like started out low here, very seasonal. So we're going to see start out flat, go up, peak out in June or so, and start dwindling down. So this is where we are right this second. Redfin's got us at 371 for the medium home price. I saw from another organization, 430. If you go here, you'll see, let's see. I don't know where Redfin, or a real deal got their data here at this time when the housing market is grappling with the dwindling inventory and storing prices, the median price of new home sold in August hovered around 430,300 dollars. So, so, you know, different data companies. Look how seasonal the sales are, right? See how down it is every year goes down into January, comes back up. And then look at the peaks and valleys, how similar. And that is, that's almost scary how similar these peaks and valleys are throughout the years. It's nuts how seasonal this business is. However, we're here. We're kind of right on track as the same curve as we normally have, lower than normal. Again, guys, this is 2008. We're going to hit 4 million transactions this year, the same amount that we hit in 2008. This is 2008. Next year is going to be a banger, in my opinion, where this is going to be the slowest time. We're in the bottom of the 10-year cycle. We're in the fall, which is normally slower. We see days on the market go up, new listings happen, inventory rise, prices soften every single year. This is nothing new. Don't let people scary to think, you know, oh, prices are going down and price cuts and all this stuff. Yeah. I mean, we're in a, we're in a down market, a double, a double whammy down market. And it's the, this is what happens every single year. So it's not rocket science to realize this. It's not rocket science either to realize that 2024 is going to start out just like these years. Sales are going to be down into January, pick back up. It's all going to happen all over again. Sales price, same thing. It's going to start out a little flat, pick up, go to the moon, new all-time highs, settle out, come back down. It's going to be the same stuff, right? Nothing new, nothing to see here. So anyway, just to summarize what we got here, we got 5 million, 5.5 million vacant homes on the market. Nothing to worry about. We had 16 million last year. We're a okay. We got a letter that went out to the Fed from the three largest trade organizations in the industry saying, Hey, can we just get some certainty here? And I think the feds probably responded with, look, we don't even know what's going on. We're still trying to figure it out ourselves. And when you look at new listings, we're catching up to last year, which isn't really much, you know, considering, but it is something and it's normal this time of year, but we're getting a little more of the normal, but it's not doing much to active listings as we got the trade up seller or the relocator who's selling to buy, right? So I hope you got something out of this video. My voice is about shot. So I'm just going to end it right here. Look out for the Grant Cardo interview tomorrow. And until then, let's go.