1/20 Ride The Wave
Phoenix's Balanced Market Is Over, Mortgage Rates Inch Closer to 7% Again, Wall street Buys More Homes
This newsletter is 640 words and should take about 5 minutes to read.
Read last week’s newsletter here → "1/20 The Year Of Disinflation"
Tesla will showcase its Cybertruck on its China tour. Drugmakers are raising prices on Ozempic and similar drugs. Spirit is in a tough spot after the failed JetBlue buyout. Alec Baldwin has been charged with involuntary manslaughter. Hong Kong billionaire Jimmy Lai will spend 1,000 days in solitary confinement for talking trash about China. A snake was found on a plane from Bangkok to Phuket, Thailand. And the bill for a record amount of commercial real estate debt is coming due.
tl;dr
The short lived balanced market is over
The average mortgage rate is 6.92%
Wallstreet is buying more homes again
Phoenix
For Buyers:
The balanced market didn’t last long, 7 weeks to be exact. Last month the Federal Reserve gave the housing industry a much needed gift. Not only did they not raise the Federal Funds Rate, they also announced their intention to drop it three times in 2024. Conventional mortgage rates responded by dropping from 7.1% to 6.62% within 2 days. Mortgage rates have now dropped 1.4% since they peaked at 8% in October 2023, saving a borrower nearly $380 per month on a $400,000 loan, a payment decline of 13%. For perspective, each time the rate drops by 1%, the mortgage payment can drop between 9-10% depending on where it started, in many cases saving at least $200/month*.
For Sellers:
While Greater Phoenix is out of a balanced market and continually improving, the seller’s market is still very weak so a combination of good condition and price remains key to facilitating an offer within a reasonable time frame, along with an open mind regarding concessions to the buyer. New listings so far in the first week of January are higher than last year, but not high, and while inventory is beginning to rise moderately it’s still 37% below normal for this time of year.
Side note - I had clients make an offer on a property in South Scottsdale. The sellers ended up receiving 20+ offers with 80+ showings in 5 days. See the proof down below.
The Cromford Market Index is a gauge of Phoenix’s Supply and demand metrics. 100 is considered a balanced market. Anything higher than the 100-point benchmark is considered a seller’s market. Anything below 100 is considered a buyer’s market.
As of January 19th, 2024, the CMI has increased to 115.7. Up 2.3 points from 7 days ago.
Supply has decreased by 2 basis points and demand has increased by 1.3 points.
Rates
7-Day rate change: +23 basis points
YoY change: +77+ basis points
Average interest rate: 6.92%
The wolf of 123 main street
As if Blackstone didn’t manage enough assets already ($10 trillion) the Hedge Fund has agreed to acquire major landlord Tricon Residential for $3.5 billion.
Tricon is one of the major single-family rental landlords taking advantage of the sector’s resilience, as single-family rents have proven to be more solidified than apartment rents in recent months. In the third quarter, Tricon posted rent increases above 6% year-over-year.
Blackstone has been a critical backer of single-family rental efforts for the last decade.
After selling off its shares in Invitation Homes in 2019, post-pandemic trends beckoned Blackstone back into the sector. In June 2021, the investment giant made a $6 billion bet on Home Partners of America, buying a portfolio of 17k properties.
If Blackstone was its own country, it would be the 3rd largest GDP in the world.
S&p500 weekly vibe check
US stocks rose, led by tech stocks and chip stocks thanks to AI optimism
The Nasdaq led indices with a 1.35% gain
Meme, tweet, & fact of the week
The world's largest stadium is the Rungrado 1st of May Stadium in Pyongyang, North Korea.