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Rising mortgage rates aren’t the biggest real estate problem, this is - YouTube

Channel: Fox Business

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welcome back well spring has sprung and

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with it comes a competitive home buying

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season the 30-year fixed rate mortgage

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now at 5.1 percent that is down from the

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highs of the last couple of weeks

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dropping for the first time in weeks by

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the way despite this decline though

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mortgage rates have surged to decade

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highs this year and the current rate is

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still drastically higher than the same

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time last year when this number was at

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2.98

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what a move in one year joining me right

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now is the ceo of century 21 mike

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meadler mike it's great to have you

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thanks so much for being here first off

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have you seen any cooling off on this

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market as a result of 5

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mortgage rates assess the market for us

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yeah good morning maria obviously a lot

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of the macroeconomics like you just

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talked about are changing the market

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we're definitely in a different place

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than we were even not you know kind of

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three months ago we've seen uh the

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highest run-up in mortgages that we've

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seen in a 120-day span

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like you said the mortgage rate is over

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the rate that it's been in a decade the

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good news is that there is still a lot

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of demand the people who have a lot of

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savings because we've had a lot of

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savings here in the us and people saving

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up their money for that dream of home

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ownership and again the good news is

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that there are plenty of jobs out there

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so even though we've seen a quick rise

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in mortgage rates we are still seeing

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people active very active in the market

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problem is again with inventory right

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our active listings are down 10 from

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last week year over year and our pending

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listings are down 14 so it's really

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trying to get available inventory to the

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market and you know even with higher

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mortgage rates we're seeing still a run

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up in the median sales price about 17

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year-over-year from last week and a sale

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to list price ratio of about 102 so

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believe it or not homes are going off

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the market quicker today than they were

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even in the frothy market that we saw a

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year ago uh where mortgage rates are

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yeah it's a great point because of this

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lack of supply it's keeping prices

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elevated um we did a whole panel on this

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at the milken conference where you know

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all of my guests were saying this does

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not look like 2007 at all because of

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that supply issue what are your

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expectations for the spring home buying

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season then

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yeah i mean there's no more cyclicality

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to be quite honest with you um you know

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i'm hoping that more homes will come on

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the market but the truth of the matter

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is from our generational standpoint in

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population household formation

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standpoint you've got millennials who

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are the largest generation storm in the

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marketplace 90 million of them right

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behind them gen z 60 million of them and

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honestly we just have not built enough

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homes in this country between 2012 and

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21 we had 12 million new household

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formations but only built seven million

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new homes and so i think obviously you

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know with inflation and where the prices

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of lumber and labor are in this country

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right now you don't have a lot of

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builders you know really working double

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time to catch up to what we need from an

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overall supply perspective so uh you

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know we're gonna be in a pinch i know

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that uh nahb has been you know rising

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raising the forecast for homes uh built

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but uh we need to be working double time

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in order to get the supply that we need

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back out to the marketplace

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yeah i mean it feels like the perfect

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storm mark tepper jump in here

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hey mike i'm trying to figure out if

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there's any chinks in the armor as it

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relates to the housing market so my

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question for you is how are higher

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mortgage rates affecting homes that are

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currently under contract and i'm talking

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about homes that are actually being sold

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with a mortgage contingency in place so

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non-cash buyers

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are are you seeing more of those

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situations fall through because the

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buyer can't meet the mortgage

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contingency i could only imagine a buyer

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showing up with a a pre-qualification

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letter from three months ago at a three

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percent rate now that rates are five

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percent they might not be able to meet

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that mortgage contingency so are are you

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folks seeing stuff like that happening

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yeah it's a great question i think it

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really comes to that first time home

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buyer segment of the market which is

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roughly anywhere from 29 to 32 percent

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of the market in a normal time and uh

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it's a great question because today

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the average family would need about 30

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000 more dollars in income than they

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would need just a year ago in order to

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purchase the median average price for a

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home so it's really going to i believe

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hurt the the new you know entrance to

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the market the first time home buyer we

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haven't seen it right now again i

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believe because there's so much pent up

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demand there and so many folks coming

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into the market that have you know a

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decent savings rate maybe more than 20

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down or they're getting some money for

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mom and dad or a family member

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yeah we had the president and ceo of the

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corcoran group on

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on on tuesday pamela liebman joined me

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and she said this is actually pricing a

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lot of people out of the market and

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they're pushing them into the rental

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market problem is rents are also soaring

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here's pam lieben watch this

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when you talk about the price of a home

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right now and the fact that it has risen

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so much

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some people will say well we're in the

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housing bubble we're in where we were

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back in 2006. and you say absolutely not

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it's not even close i mean the way they

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wrote mortgages back then is completely

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different than the underwriting that's

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taken place the oversupply back then was

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significant and we just don't have it we

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are so under supplied across the country

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that um i do not believe one iota in a

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housing bubble

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so mike how long can this go on then i

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mean we're seeing prices up across the

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board and the rental market is also up

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and i think that's the counterbalance

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right maria pam is a good friend of mine

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and a colleague and she operates in a

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lot of the high-end markets across the

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united states but even in secondary and

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tertiary markets you're seeing the same

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exact thing so you have a choice you

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know you're going to pay a little bit

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