On February 4th of this year, industry expert Barry Habib joined Finance of America Mortgage for a presentation on the current real estate marketplace and his opinions on interest rates moving forward into this year and beyond.
By way of introduction, Barry Habib is a real estate and mortgage industry executive, bestselling author, and founder and CEO of MBS Highway. Barry is also a well known media resource and TV commentator on the mortgage and real estate markets.
Barry discussed his predictions for the housing market going forward in 2021 and the benefits of utilizing some key tools to show clients and referral partners the power of home ownership.
Also, regarding the AVM reports and “Bid Over Ask” tools that were talked about during the program – I can easily do them for any property or client you have.
Finally, here are a few links that might help, too:
It’s true – mental toughness really does win baseball games. As you probably know, one of the baseball related subjects that’s continually in focus here at The Lending Coach is that of the mental side of baseball.
Without a strong mental game, a player’s physical performance will always be limited.
Bill Cole is one of the most successful performance psychology consultants working today. He truly is a pioneer in the field of sports psychology, as he was the first person in the world to be awarded a Bachelor of Science (with honors) in Sport Psychology.
He has been mental game coach or consultant to thousands of high school, college, professional, world champion and world record-holding athletes.
In his article, he writes about the 5 key things he focused on with the Stanford baseball team during their heyday:
1. Learn To Control Your Focus: The most important part of the mental game is “attentional control”. Where you place your focus, in what way, and for how long is key.
2. Keep Your Mind In The Here And Now: Good baseball is played one pitch at a time. Do that and your mind stays in the moment, the now.
3. Stay Poised And Patient: You want to play aggressive baseball, but you also need to remain self-aware, and tuned in to what is happening around you. This is vital to being a plugged in player who makes things happen
4. Develop Confidence And Self-Belief: If you don’t believe in yourself, who will? Everyone around you can tell you how good you are, but if you discount this encouragement, it will never enter your head and heart.
5. Use Mental Rehearsal: Get a competitive advantage with your mind by playing the game in advance, using visualization. Go to the movies in your mind and mentally rehearse what you will be doing in competition.
Barry Habib is a real estate and mortgage industry executive, bestselling author, and founder and CEO of MBS Highway. Barry is also a well known media resource and TV commentator on the mortgage and real estate markets.
You are cordially invited to this exclusive 90-minute webinar on Thursday, February 4th at 12:00pm MST/11:00am PST, sponsored by Finance of America Mortgage.
As a professional in the real estate industry, you know that interest rate fluctuation and real estate pricing can be a challenge to predict. Stay ahead of your competition and find resources to help you become a trusted advisor to buyers and borrowers in your community in this rapidly changing environment.
Barry will discuss his predictions for the housing market going forward in 2021 and the benefits of utilizing this system to show clients and referral partners the power of homeownership.
In taking a look at the 2021 real estate and mortgage rate forecast, I’ll briefly analyze what’s driving the real-estate market and what should impact interest rates over both the long and short term.
Similarly to 2020, the biggest issue will be finding enough homes for buyers, as housing inventory is near all-time lows throughout much of the country.
At the same time, because of today’s low mortgage rates, housing affordability is at a fantastic level, even with increase in home prices, which is great news for buyers.
Real Estate
First, let’s take a look at 3 different factors regarding real estate that impact pricing – supply and demand, appreciation, and home affordability.
Supply and Demand
You might remember the idea of supply and demand from your economic or social studies school days. Real estate prices also depend on the law of supply and demand. When the demand for property is high but property is scarce, prices rise and it becomes what is known as a “seller’s market”. Alternatively, when the number of available properties increases and saturates the market, prices typically drop.
Right now, we are in a time of low supply and high demand – making prices rise.
There are a few reasons for this phenomenon, and we will see them into 2021 and beyond.
Demographics
First of all, the number of first-time home buyers is actually increasing, mainly due to the number of babies born in the late 1980s and early 1990s. The average age of a first-time buyer is 33…and you can see by the chart below, we are just getting started:
Millennials are expected to drive the market in 2021, while Gen-Z buyers, the oldest members of which will turn 24 in 2021, will also step onto the playing field as first-time buyers.
Over the next 4 to 5 years, there will be more buyers in the marketplace, increasing demand, keeping prices moving slightly upward.
New Construction
Housing development continues to lag across the nation. Thanks to a 3 to 6 month shutdown that started in March of last year due to Covid-19, new construction slowed considerably in 2020:
As you can see by the chart, there just were not as many homes built last year than in years prior. This is creating shortage of inventory for would-be buyers…which means prices move higher, as well.
Inventory
If you’ve been checking up on the latest real estate news, you’ve probably seen quite a few reports saying that housing inventory is low at the moment. Well, those reports are absolutely correct:
As you can see in the chart above, inventory has acutely been falling since 2011 and has reached all-time lows in 2020.
Frank Nothaft, a senior vice president and chief economist at CoreLogic, said low home inventory has led to rapidly increasing prices across the nation as dedicated buyers compete for a limited number of homes.
However, he said the number of homes for sale will increase with widespread vaccination for the coronavirus, which kept some of the most vulnerable homeowners from selling this year.
Affordability
Believe it or not, current research shows that housing has actually become more affordable this year, despite home appreciation and tight inventory. Affordable homes are possible thanks to lower mortgage rates and greater purchasing power.
For example, weekly earnings are up more than 5.9% versus a year ago. Additionally, only a portion of your income goes towards paying your mortgage. A 5.9% rise in income can offset a much greater percentage rise in housing expense.
For the average home buyer, month-to-month housing costs are lower than they’ve been at almost any point in the last four years because real wages are up and interest rates are down, even considering the Covid-19 pandemic.
This tells us that homes are actually more affordable, even though they have appreciated significantly over the last few years.
This is fantastic for homeowners, and although 2021 might not have the same increase, most experts see appreciation to be in the 4% to 6% range in 2021.
“The housing market performed remarkably well in 2020 despite the volatile economic state. While we can expect to see lingering effects of COVID-19 resurgences and subsequent shutdowns in the early months of 2021, vaccine distributions and stimulus actions should revitalize economic activity and keep home purchase demand and home price growth strong. – Frank Martell, President and CEO of CoreLogic
Interest Rates
Mortgage rates have risen a little during the first 10 days of 2021, due to the market’s concern that there will be increased spending, debt, and inflation with the incoming administration. The 10-Year Treasury yield is now at its highest level in a year, which is the best tracker of mortgage rates – find out more about that here…
Federal Funds Rate
How can mortgage rates actually rise when the Fed Funds Rate remains at zero? Let’s remember that the Fed Funds Rate and Mortgage Rates are two very different things.
The chart below shows how mortgage rates move in a similar direction to the Federal Funds rate, but still move up-and-down, even when The Fed has rates at 0%.
As you can see, mortgage rates can move up over 1% even with the Federal Funds rate at 0%!
It’s important to remember that although we’ve seen a little move higher in mortgage rates in the first week of 2021, they are still near all-time low levels.
Per most industry analysts, rates should remain low for 2021, although there may be some ups-and-downs due to inflation related pressure.
Mortgage rates are affected by inflation because inflation erodes the buying power of the fixed return that a mortgage holder receives. Interestingly, the best way to combat inflation is by raising the Fed Funds Rate. If inflation begins to rise, and there are already some signs of this, Mortgage Rates will start to climb in response. All this can occur while the Fed Funds Rate is at zero.
With that said, the industry experts I follow seem to think that we should see rates in the 3% to 4% range for the 30-year mortgage over the course of 2021.
Debt and Interest Rates
One reason to believe rates will stay low, even with Covid-19 concerns and inflation, has to do with governmental debt loads relative to mortgage rates. Historically, the higher the debt, the lower rates move.
The chart above shows the debt level in red (moving upward) and interest rate level in blue (moving downward). With all of the debt that the US has taken on in the last year, we can probably expect to see rates stay relatively low.
In Conclusion
2021 looks to be a positive one for both buyers and sellers, although the market would clearly be considered a “seller’s market”, because inventory is so low.
However, because real wages are up, home affordability is up, and interest rates are forecasted to remain low, buyers are in a great position to purchase.
To sum up the 2021 real estate and interest rate forecast:
Mortgage rates are likely to remain low
Housing inventory will continue to remain low
Demand for real estate will rise due to a combination of factors
Home prices will continue to move upward
Housing will still remain affordable, due to low rates
In reality, now is a fantastic time to purchase or refinance and take advantage of market appreciation and low mortgage rates. Contact me for more information, as it would by my privilege to help you.
There’s a ton of emphasis at the major league level on hitting for power today. Interestingly, we have seen a fair amount of that moving into the high school and youth levels, as well. One college coach that I’m following argues that the “little things” are getting overlooked.
Many high school coaches (including myself) will argue that it’s costing their teams runs and wins.
When you think about it, there aren’t that many 16 year-old players that can consistently hit the ball out of the ballpark!
Paul Petricca is a great collegiate hitting coach in the Midwest and is a good friend of mine. He is an astute observer of all things hitting – both baseball and softball….and you can find out more about him here at his blog-site, Torque-Hitting. He really understands where power comes from and how to convert the power source into bat speed.
Paul argues that one of the most effective offensive strategies throughout the history of baseball has been all but lost—choking up on the bat!
Greater Bat Control
An excerpt: “Choking up on the bat makes the bat shorter, which enables hitters to control it better. It is also easier for hitters to find the sweet spot of the bat. This improved bat control is especially effective with two strikes or in pressure situations. In 2016, Anthony Rizzo almost always choked up on his bat when he found himself in a two strike count”.
“By choking up, he increased his chances of putting the ball in play, instead of striking out. His sole objective was to force the defense to make a play or to find a hole in-between the fielders.”
As a high school coach, more often than not, all we are looking for is solid contact from our hitter.
Think about this situation that is all-too common in our game at the lower level: less than two outs and a runner on 3rd base. There are essentially two things that won’t allow us to score the run if the infielders are at normal depth – the strike out and the pop-up.
By gaining better bat control and choking-up a bit on the bat, the hitter really does have a better chance to hit that ground ball up the middle that enables the run to score.
Increased Bat Speed and Power
Petricca argues that swinging a shorter and lighter bat increases bat speed, which translates directly into more power. He states that “Barry Bonds was able to hit with consistent power, even though he choked up on the bat, because he was able to generate enough home run bat speed with a shorter bat. I believe if Anthony Rizzo continues his two strike strategy, he will begin to hit more home runs with his hands choked up on the bat.”
Paul is often asked by his hitters whether they should swing a slightly larger or smaller bat. His answer:
“If baseball and softball hitters can swing a larger bat without sacrificing bat speed, then the change would be appropriate”
More importantly, he states that:
“If hitters begin using a slightly smaller bat, then their bat speed should naturally increase to allow them to hit with the same power as using a larger bat. Choking up on the bat to make it smaller and lighter has the same positive effect.”
Defense Against Getting Jammed
In addition to more bat speed and bat control, hitters can choke up on the bat as a way to get a bigger part of the bat on the ball to eliminate getting jammed inside. Instead of hitting the ball near the handle, the hitter can now hit inside pitchers on a bigger part of the bat. Even if you don’t find the “sweet spot” of the bat, that extra inch or two can often be the difference between an infield pop-up and a soft line drive to the outfield.
Petricca finishes his piece by stating “hitters should welcome any technique or strategy to gain more bat control without sacrificing power, especially in pressure situations. It is time for choking up on the bat a few inches to make a comeback in baseball and softball.”
Thomas Eugene Bonetto
Mortgage Loan Originator
NMLS: 1431961
About The Coach
Tom Bonetto has been helping his customers and players achieve their best for nearly 30 years. His goal is to provide both a superior customer experience and tremendous value for both his business associates and his players alike.
