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When is the drop coming? When are we going to see foreclosures & short sales?
I have been getting these questions OFTEN for the past 6 months and today I am going to get into the topic of buying real estate in this housing market.
First off: mortgage rates fall below 3%, the lowest in US History. Freddie Mac did a study, that the average, 30 year fixed rate mortgage, is now an average of 2.98%.
Why are mortgage rates so low in the housing market?
Rates drop when demand for bonds and treasury bonds INCREASE. Why is that? Supply and Demand. When you have a lot of individuals trying to go after the same bonds/treasury bonds, the yield tends to go down.
Well again why is that?
Typically, a lot of mortgage lenders will tie their rates with 10-year treasury bonds but not only that but treasuries in general along with the larger bond market.
At the moment, a lot of Investors are buying up 10-year treasuries and bonds, why is that?
I can safely say there is A LOT of volatility and uncertainty, not only in the stock market but the housing market as well. There is a lot of moving pieces right now, mortgage forbearance, commercial real estate issues, the list is endless. And we are all just waiting to see when and how the wave will crash when it does (also the 2nd wave of coronavirus). Just take a look at how the stock market fluctuated since the start of the pandemic and a lot of folks have taken their money OUT of the stock market as well. Because they see that the volatility of the market can jeopardize their investments/retirement accounts (circa…..2008).
AND Bonds are a much lower risk than playing the Stock Market.
The biggest buyer, right now, is the Federal Reserve. They purchased $44 Billion in mortgage backed securities in 2020. As for most of the year, the Federal Reserve spent $2 Trillion dollars in mortgage backed securities & treasury securities.
It’s hard to say what that will do to the Fed’s balance sheet, only time will tell.
Now we are also at a record low for home foreclosures. There was a 44% drop in the beginning of 2020. But that might change in the August this year, with a lot of the programs set to expire for mortgage payments…….buckle up.
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The Kwak Brothers are millennial real estate investors who have acquired over 82 Units of Rental Units and have raised over $20,000,000 of capital for their real estate deals. They are based out of the Chicago-land area and they are dedicated to helping hard-working people become financially free real estate investor! They specialize in owner financing acquisition and raising capital. They are the creator of the FORCE Strategy (Find the deal, Owner Finance It, Raise the Capital, Cashflow It, and Expand your Financial Freedom)
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—DISCLAIMER— The suggestions, advice, and/or opinions that are given by Sam Kwak (The Kwak Brothers) are simply opinions. There are no guarantees of set outcomes. Listeners, guests, and attendees are advised to always consult with attorneys, accountants, and other licensed professionals when doing a real estate investment transaction. Listeners, guests, and attendees are to hold Sam Kwak, Novo Elite, Inc. and the Kwak Brothers brand harmless from any liabilities and claims. Not all deals will guarantee any profit or benefits. Listeners, guests, and attendees are to view and listen to all materials and contents furnished by the Kwak Brothers as a perspective based upon experience.