The RE Reality Zone is a weekly 3-minute read that cuts through real estate noise and gives you the data that matters to make money - no hype, just the critical information to make good real estate investment decisions.

30-Second Summary

Buying activity is up, good news. Inventory is up, but it's also up every year at this time. It's seasonal.

The RE market is still stabilizing from the pandemic and post pandemic rate change. That threw the market completely awry and it takes awhile to figure out what we’re going to end up with. What we know for SURE, is that we don’t have enough houses.

That makes a “Crash” very unlikely. We also don’t have much distress in housing. We have more inventory because houses are harder to buy due to affordability. It’s not more sellers than normal, it’s less home-buyers.

• Purchase loans dropped 20%, now making up just 41.4% of the market.

• Refinances declined 12%, but grew in market share to 40.5%.

• HELOCs dipped 5%, yet remain stronger year-over-year.

We MUST increase wages for people to afford current house price. I don’t mean through min wage increase, I mean through job growth by creating demand for products and services, And building more affordable housing with less regulation.

Check out this chart often for wage numbers. (notice pre-2020)

The number of owners with a mortgage over 6% has increased to 17%, the highest since 2016. But 80% of borrowers are below 5%. The big stat for you is that house payments are 115% higher than in 2020.  The monthly payment on a house is only $26 shy of the recent high. Buyers are applying for mortgages and searching for homes, but they are cautious. Sellers don’t want to sell to get a higher payment somewhere else.

Nothing shows an imminent price crash unless the greater economy tanks. That is unlikely. The real problem is that people with median incomes can't afford a median-priced house. That is a significant problem that can only be fixed with wages catching up to price.

We need more houses. If the illegal immigrant deportation situation changes, that may affect housing. No one knows by how much.

Make your purchase and sale decisions based on the fact that the sales pace is increasing now.

I have some comments below on the tariff situation.

Key Stats

(from our friends at Altos, Housingwire, Jason Hartman, and others)

Last week’s SFH Inventory on Market: 768,000 (altos)
This week’s SFH Inventory on Market: 804,000 (32.8% higher than same week last year)

Sales volume – 68,000 new contracts (8% higher than same week last year)

This week’s price reductions are Higher than last year at 38.3% (normal is 30-35%).
(A leading indicator of buyer demand strength, and home price direction)

April’s on-market SFH Median Home Price: $403,100
May’s on-market SFH Median Home Price: $414,000 (1.82% higher than same month last year)

Last week’s Median Price of Homes in Contracts: $465,000
This Week’s Median Price of Homes in Contracts: $460,015

Housing Vacancy Rate: 6.9% – very low (quarterly)

National vacancy rates in the first quarter 2025 were 7.1 percent for rental housing and 1.1 percent for homeowner housing. The rental vacancy rate increased from 6.6 percent in the first quarter of 2024 and was slightly higher than in the fourth quarter of 2024 (6.9 percent) Source

Policy Watch

Big picture items that may affect Real Estate:

• I hope to provide you with the commonly referenced, applicable financial data to see for yourself what effect government economic policy has on jobs, incomes, debt positions, and affordability for Americans, regardless of party.

• *** The jobs report is important. Please know when the gov puts out a report like "jobs", there is a revision done a month or so later, sometimes later, when they crunch the actual numbers. The press rarely reports the revisions, but that is the most accurate. I advise you to ignore the initial reports and ONLY look at the later revised reports for a more accurate view. They indicate part-time, full-time, or foreign-born jobs, those are categories that matter.

• April added 177k Jobs

• May added 139k jobs

• Tariffs are a big topic right now. I suggest this read.

  The goal is “reciprocal” tariffs with the countries that tariff us to sell products in their markets. There is no need to maintain the high trade deficit we have now. How does that serve America?

• Renegotiating fair trade benefits American workers and industries. Very difficult to work through the math. We do know it’s been billions in revenue each month. Continuing to observe.

• Lot of chatter on the Big Beautiful Bill. OMB and CBO disagree on the outcome, but the CBO were not factoring in the tax cuts. The OMB estimate of $1.4 trillion reduced is likely accurate.
  

• The US owes 36 Trillion dollars in national debt, please hold our leaders accountable to reduce that number and be fiscally responsible. Yes, it means tough discussions on what should be cut. This high debt means interest rates have to be higher to sell the treasuries to other countries.

• The BRICS nations are going to have a hard time coming off the Dollar as the U.S. actions being taken to curb spending kick in to increase stability. They’re going to try, but the consensus is odds are low.

• Please say NO to Central Bank Digital Currency (CBDC) in any form (i.e., Fedcoin).

• Passive income from RE is a shield for most of this, whereas "flipping" and wholesaling can stop at any time. **** We love “co-living” for amazing cash flow. See how we can help you retire with just 5 single-family houses.

Mortgage Applications & Rates

Why it matters: The current market relies HEAVILY on the CHANGE in mortgage rates.

The average rate on a 30-year fixed mortgage backed by Freddie Mac rose by 3 bps from the previous week to 6.89% as of May 29th, 2025. It was the highest rate in nearly four months. "This week, the 30-year fixed-rate mortgage rose slightly higher……source: Trading Economics

The volume of mortgage applications in the US fell by 3.9% in the week ended May 30th 2025, marking a third consecutive week of falls, after a 1.2% decline in the previous period, according to the Mortgage Bankers Association. Applications to refinance a home loan, which are most sensitive to weekly rate moves, dropped 3.6% and applications for a mortgage to purchase a home declined 4.4%...... source: Trading Economics

Delinquency & Foreclosures

(Monthly as of April 2025)

Why it matters: Delinquency is the leading indicator of borrower stress. (It will lag behind a few weeks before the data is reported)

ICE First Look at Mortgage Performance: Foreclosure Activity Edges Higher Following Recent Record Lows

• The national delinquency rate ticked up 1 basis point (bp) to 3.22% in April and is up a modest 13 bps (4.1%) from the same time last year. Still, delinquencies remain below pre-pandemic levels.

• Serious delinquencies – loans 90+ days past due but not in foreclosure – improved seasonally but rose 14% from April 2024 marking the sixth consecutive month of 10%+ annual increases.

• While foreclosure activity remains muted, foreclosure starts (+13%), sales (+9%), and active inventory (+4%) all rose on an annual basis for the second consecutive month.

• April’s 6,500 foreclosure sales marked the largest single-month volume in 15 months, with VA sales, which account for the bulk of the recent rise, hitting their highest level since 2019.

• Prepayment activity, measured in single month mortality, jumped to 0.71%, the highest level since October. This rise was driven by stronger home sale and refinance-related prepayments, which grew +19.0% over the previous month and +34.9% over the previous year.

https://mortgagetech.ice.com/resources/data-reports/first-look-at-april-2025-mortgage-data

Find additional supporting data on our website

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Corey & Team
Fidelis Wealth Builders

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