TLDR;
Jackie Baker discusses the impact of dropping mortgage interest rates on housing prices, addressing concerns about affordability and potential bidding wars due to low inventory. She analyzes recent real estate articles, poll results indicating that high prices are a bigger concern than interest rates, and the potential effects of bond buying on mortgage rates. She also touches on regional market trends, the influence of Zillow's estimates, and provides advice on navigating the current real estate landscape.
- Mortgage rates have dropped below 6%, but housing prices remain a primary concern for potential buyers.
- Low inventory in certain markets may lead to renewed bidding wars despite lower interest rates.
- Zillow's estimates and recommendations should be approached with caution, and buyers should consult with real estate agents for accurate comps.
Intro [0:03]
Jackie Baker introduces the topic of how lower mortgage interest rates, which have recently dipped below 6%, will affect housing prices. She notes that many people believe these lower rates won't significantly improve affordability, a point of contention she plans to explore. The discussion aims to provide a dose of real estate reality, examining whether these rates will drive up housing prices.
House Rules and Chat [0:38]
Jackie thanks viewers for joining and asks them to share their location in the comments. She outlines the house rules, requesting that questions be marked with "QQQ" for easy identification and encouraging viewers to share any housing wins, such as accepted offers. Jackie acknowledges familiar faces in the chat and expresses appreciation for viewers tuning in despite other commitments, like watching a college championship game.
Interest Rates and Market Influences [2:26]
Jackie discusses recent articles about mortgage rates dropping to 5.99% for a 30-year fixed rate and 5.375% for a 15-year fixed rate. She explains the difference between the interest rate and the APR (Annual Percentage Rate), noting that APR includes additional fees like points. Several factors driving these rates are identified, including slow labor market data, anticipation of Federal Reserve rate cuts, government directives, and inflation trends.
Bond Buying and Housing Affordability [5:53]
Jackie discusses how bond buying, including actions by President Trump, can influence mortgage rates and affordability. Trump's plan involves Fannie Mae and Freddie Mac purchasing $200 billion in mortgage bonds to push rates below 6%. While experts agree this could lower rates, they also note that without addressing the low housing supply, affordability hurdles will remain. Jackie expresses concern that lower rates could bring more buyers into a market with limited housing, potentially driving prices up again, especially in areas like the Northeast and Midwest.
Market Activity and Zillow's Influence [8:36]
Jackie shares examples of homes in Bergen County, New Jersey, that are generating significant interest, as indicated by views and saves on Zillow. She points out that one house, listed at $889,889, is considered a "hot" property, while another, not yet officially on the market, is also attracting attention. Jackie cautions against relying solely on Zillow's offer recommendations, which suggest offering above the list price to increase the chances of winning an offer. She advises consulting with a real estate agent and examining comps to make informed decisions.
Monthly Housing Costs and Market Concerns [12:03]
Jackie references a Redfin article indicating that monthly housing costs have decreased by 5%, the largest decline in over a year, with the median payment dropping to $2,413. This is attributed to falling mortgage rates, influenced by President Trump's directive for federal agencies to buy mortgage bonds. Despite lower costs, fewer people are buying and selling homes, though mortgage purchase applications have increased. Jackie reiterates her concern that increased competition due to lower rates will drive prices up, advising buyers to act now to secure deals before the spring market intensifies.
Listing Strategies and Zillow Accuracy [18:54]
Jackie addresses a viewer question about the accuracy of Zillow's estimated remaining mortgage amounts, noting that Zillow likely pulls this data from public records, though it may not be 100% accurate. She then responds to a question about whether to list a house while still living in it or to move out first. She advises that if there's another place to live, moving out can make showings easier, but otherwise, it's manageable to stay in the house and work around showings.
Housing Market Insights and Listener Wins [20:47]
Jackie congratulates viewers who have had offers accepted and closed on new homes. She addresses a question about the long-term housing market, noting that while a correction and more balanced market are expected, a shortage of inventory persists due to builders not resuming construction after the 2008 financial crisis. She advises viewers to consider days on market when making offers and shares that lowball offers are unlikely to be accepted on newer listings.
Poll Results and Price Concerns [24:50]
Jackie discusses the results of her recent poll asking if the drop in mortgage interest rates to 6% would make people want to buy a home in 2024. 80% of respondents said no, citing the need for significant price drops as the main issue. Commenters emphasized that housing prices, not interest rates, are the primary problem. Jackie notes that this sentiment aligns with what she's seeing in her market, where high prices are deterring buyers despite lower rates.
Regional Market Issues and HOA Concerns [27:27]
Jackie discusses the high housing prices in Boston and shares an anecdote about a family in Florida whose property taxes jumped significantly after buying in Detroit. She addresses a question about the demand for Florida condos, citing high HOA fees and insurance costs as deterrents. She notes that many people from New Jersey who move to Florida end up moving back to the Carolinas due to the high cost of living.
Market Dynamics and Open House Strategies [31:31]
Jackie acknowledges that prices in Ocean County, New Jersey, remain high, with some buyers still paying over asking price. She shares a story about a beach house in Lavallette that sold for $600,000 in a bidding war. She then answers a question about the importance of open houses, explaining that she uses them to create less inconvenience for sellers by concentrating showings into a 3-4 hour period.
New Construction and Builder Research [39:49]
Jackie advises viewers to do thorough research on any builder they are considering for new construction, noting that even homes built before 2020 are not perfect. She suggests talking to other homeowners in the neighborhood to see if they have had any problems. She shares that she is planning to do another video about new construction due to numerous complaints about the quality of new homes.
Home Buying Advice and Market Observations [41:38]
Jackie advises a viewer who disagreed with their spouse on a home purchase to move on and not dwell on the missed opportunity. She emphasizes that there is no guarantee of high equity and that the right house is still out there. She also shares that she has seen people lose money on real estate investments. She notes that insurance costs are rising and that some states are considering eliminating property taxes.
Spring Market and Home Features [44:13]
Jackie notes that the spring market unofficially starts after the Super Bowl and that inventory should increase in March and April. She advises viewers to start looking now. She answers a question about whether older homes are cheaper than new builds, noting that new builds may be cheaper right now due to builder incentives. She also advises viewers to be careful when considering Dr. Horton homes due to numerous lawsuits against them.
Pricing Strategies and Market Factors [48:18]
Jackie defines a house as being "on the market for a while" after 30 days. She shares her rule of thumb that if there is no activity or offers in the first two weeks, the market is telling them they are overpriced. She also discusses the Dream for All program for first-time home buyers in California and advises viewers to get with a lender familiar with the program. She advises a viewer whose realtor wants to list their building under $200,000 to ask to see the data and comparables.
Property Taxes and Market Dynamics [56:51]
Jackie addresses a question about whether the benefits of a property tax cut will go to the boomers and established middle upper class at the expense of younger generations lower class. She explains that each state has a different way of cutting or eliminating property taxes and that she hopes everyone will be able to take advantage of the cuts. She also answers a question about whether it is concerning when the seller asks a buyer to pay for use and occupancy cost, explaining that it is a normal thing.
Refinancing and Builder Quality [1:00:23]
Jackie advises that for refinancing to make a difference, the mortgage payment should be one full point lower than the current interest rate. She agrees with a comment that builders cannot make enough profit on smaller homes, which is why they are building luxury apartment buildings. She shares that she is not happy about the amount of luxury apartment buildings going up in North Jersey. She also shares that customized homes are going to be more expensive because you are customizing it.
Home Value and Market Insights [1:04:37]
Jackie states she has not heard that property tax delinquencies are increasing, but would not be surprised if they did. She answers a question about what would be a good question to ask in an open house, suggesting asking about the age of the roof, HVAC, and water heater. She also answers a question about what her best techniques are for showing homes, explaining that she lets the buyer observe and get a feel for the house while she looks for damage and the age of the water heater and furnace.
Pricing Disparities and Community Factors [1:08:51]
Jackie explains that reasonably priced homes are often in 55 plus communities because they appeal to a smaller buyer pool. She notes that people still have to pay property taxes even if they have paid off their mortgage. She addresses why there seems to be a huge disparity in house prices even for similar houses, explaining that it is because people are willing to pay more for a relatively nice house where they don't have to do that much work to it.
Zillow Estimates and Generator Value [1:12:30]
Jackie explains that Zillow bases their estimate off of public data and does not know if any updates have been made on a home, which is why it is not accurate. She answers a question about whether a standby Generac generator adds value to the house, stating that it adds a little bit of value and makes it easier to sell, but does not make the house worth $15,000 more.
New Jersey Market and Closing Remarks [1:14:31]
Jackie explains that the draw to New Jersey is New York City, as many people work in Manhattan but want to live in the suburbs. She notes that New Jersey used to have the best public school system in the country, which is another reason why people move there. She shares her website for viewers to get referred to a real estate agent in their market and reminds them to be specific about where they are looking to buy. She closes by thanking viewers for being there and promising to see them next week.
