☀️ I’m moving to Vegas – February 7 2020

TOGETHER WITH

Happy Friday.

Legendary film star Kirk Douglas died at the ripe old age of 103. He was best known for playing Spartacus, who died young after leading a slave uprising against the Roman Empire. One could say that Douglas made up for lost time on his behalf. Rest In Peace, Captain.

In today’s newsletter…

Coronavirus leaves a mark on mortgages

The hottest rental markets in the U.S.

Let’s all move to Vegas

INTEREST RATES

The silver lining’s playbook

If you’re trying to look for a silver lining in a pandemic then look no further than coronavirus’s effect on the housing market. The virus is sparking a global panic attack, the likes of which we have not seen since the SARs epidemic 18 years ago. (Has it been 18 years already? Geez I’m getting old.)

Mortgage rates are getting the brunt of the anxiety and plummeting to their lowest levels since 2016. According to the Mortgage Bankers Association refinance demand pushed total mortgage applications up by 15% for the week as home owners are running to refinance their homes.

The 30-year-fixed-rate mortgages dropped from 3.81% to 3.45% in one week. That’s the lowest rate since 3.42% in the first week of October 2016 and it’s almost a full percentage point below the 4.41% recorded a year earlier.

The 15-year-fixed-rate mortgage also dropped below 3% down to a three-year low of 2.97%. Just for reference the 15-year rate sat at 3.84% last year.

What’s driving all of this?

Fear, plain and simple. Worries over the coronavirus drove investors into the U.S. bond markets. Bonds are a safe haven to wait out the storm. The increased desire for bonds pushes yields higher and drives down mortgage rates.

Look for a hot spring.

April and May are the two best months to sell a house in the U.S. With rates this low and inventory at record lows expect some craziness this spring. I smell bidding wars.

It’s getting hot in here

When we say hot we mean overpriced. In February, the rental prices for one and two-bedroom apartments shot up in like a Falcon-9 rocket in ten of the priciest rental markets. According to The Zumper National Rent Report it now costs renters a median of $1,220 and $1,464 to rent an average one or two-bedroom apartment.

California anyone?

When we think of over-priced we immediately think of California. The Golden State held 5 out of the top 10 spots on the list even as the state lost population to Idaho, Nevada, Utah, and Arizona.

The top rental markets are…

Refinance applications drove the most traffic as homeowners looked to dump higher cost mortgages in favor of those juicy 3% loans. The 30-year-fixed-rate mortgages dropped from 3.81% to 3.71%.

Prospective home buyers stayed close to Shakira though and didn’t brave the elements. Mortgage applications to buy a home actually dropped 10% from one week earlier. Those hips don’t lie.

What’s driving this?

Not surprisingly rental investors are putting their money in less volatile rental markets like Texas, Florida and the mid-West. Speculative investors who banked on luxury condos in New York City are sitting on vacant units as millennials balked at paying $5,000 a month in rent. Imagine that.

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Viva IN Las Vegas

Las Vegas real estate is a mystery, much like its neighboring Area 51. The Nevada vacation town saw huge growth spirts with real estate in the mid-2000s, skid to a halt a few years later, and is back on the rise. It isn’t the heat or the gambling that keeps a steady stream of newcomers though. It is the appeal of relatively affordable housing, low property taxes, and lack of state income tax.

Zillow reports that 61% of online real estate searches in Las Vegas come from non-Vegas residents, indicating that people want to migrate there from wherever they currently live. And where do people not want to live? Communities with low numbers of local residents seeking real estate where they live include Nashville, Tennessee, Salt Lake City, Utah, San Jose, California, and Charlotte, North Carolina. It seems the pressures of living in crowded and competitive places is taking its toll on some who dream of pulling up stakes where things could be just a bit easier, Wagon Trail style.

Meanwhile, the outside-in location where people want to move into Las Vegas the most: Orange County, California. Residents of this expensive suburb would find Las Vegas familiar. They share many of the same coffee shops, chain restaurants and grocery stores, all with vast parking lots for all of those SUVs. The main difference? If you go grocery shopping in Orange County, you can’t play slot machines in the Safeway. If you go in Las Vegas, you can. And that’s not a sin!

News By The Numbers

Zero. That’s the number of times President Trump mentioned the affordable housing crisis during his State of The Union speech on Tuesday.

Zero. That’s the number of times Democrats mentioned the affordable housing crisis in their post State of The Union rebuttal.

25 million. That’s the number of affordable homes needed in the U.S.

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