Stock market activity ‘indicator’ of what will happen in the real estate market: Expert
Luxury real estate agent Katrina Campins said Wednesday that “the stock market is going to be an indicator of what’s happening in the real estate market.”
The founder of Campins Company pointed out that customers have been affected by the stock market, which “rippled through to the real estate market”.
Markets have been volatile in recent months amid economic uncertainty as inflation stands at a new 40-year high and the Federal Reserve has raised rates in an attempt to curb price spikes.
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“Some people say that the stock market is not doing well to be able to invest in real estate, but overall it has a psychological effect even on cash buyers,” Campins told “Cavuto: Coast to Coast “.
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“Sometimes my clients say, ‘Well, I can always find a cash buyer. “Yeah, but they’re impacted by the stock market and they’re impacted by rising interest rates even though it’s psychological and they may not be as liquid because their portfolio isn’t doing as well.”
Campins also noted that the rise in interest rates caused a slowdown in the real estate market.
The interest rate sensitive housing market has started to cool significantly in recent months as Federal Reserve measures to tighten policy at the fastest pace in three decades. Policymakers have already approved a 75 basis point rate hike in June and are expected to approve another of that magnitude at the end of July.
Following the rate increases, the average rate on a 30-year fixed mortgage – the most popular among new owners – climbed to almost 6% in June, although it has since moderated. The average rate for a 30-year fixed-rate mortgage hovered around 5.51% for the week ending July 14, according to recent data from mortgage lender Freddie Mac.
The real estate expert provided information on the same day that it was revealed that sales of existing homes in the United States had fallen to a new two-year low in June, as rising mortgage rates and the relentless increase home values slowed activity by keeping potential buyers out of the market. .
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Sales of older homes fell 5.4% in June from the previous month to an annual rate of 5.12 million units, the lowest level since June 2020, according to new data released by the National. Association of Realtors. This is the fifth consecutive month of declining sales. On an annual basis, home sales fell 14.2% in June.
The slowdown in sales came as the national median home price jumped in June, hitting a new record high of $416,000. That’s a 13.4% increase over the previous year and up from the revised $408,400 in May.
Campins noted that there is still “very low supply”.
She added that “some buyers have slipped out of the market and sellers are waiting for them to come back” due to current market conditions.
“What we’re starting to see is that even with interest rates going up, some people are now looking to an ARM or an adjustable rate mortgage, which is very different from what we’ve seen these years,” she explained. “Basically, you get an ARM for five to seven years. The rate doesn’t change during that time, and then it will adjust after that.”
“The reason for that, the old adage is, ‘You marry the house and date the rate,’ so if you ever find a home in that market that you like, you can always refinance later,” she continued. .
There were about 1.26 million homes for sale at the end of June, according to the report released Wednesday, an increase of 2.4% from a year ago. This is the first annual gain in three years. At the current rate of sales, it would take about three months to deplete the inventory of existing homes, compared to 2.6 months a year ago. Experts consider six to seven months a healthy level.
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Campins added that “some markets are doing better than others” and “we’re starting to see more inventory, which is a good thing for buyers because we had such a low amount of supply in the market.”
Megan Henney of FOX Business contributed to this report.