We're currently in the midst of the WORST September for mortgage purchase applications since 1994.

Literally - lowest level of buyer demand in 30 years.

Fed rate cuts not having the stimulative impact on the housing market that many hoped for.

Note: mortgage apps to buy are currently 44% below pre-pandemic levels. 1) What's alarming to me is how the big news sources are currently reporting on the mortgage market.

I keep seeing articles from @YahooFinance , @Bloomberg , and others attempting to spin a narrative that demand is "surging".

But clearly - this is not at all the case.

A problem is developing in the Housing Market:

Homebuyers are not responding to lower mortgage rates.❌

Mortgage apps (to purchase) still down 57% from pandemic peak. And 43% from pre-pandemic levels.

You can see clearly on the chart below that applications are not following the inverse of Mortgage Rates up.

(thread) 1) This has caught a lot of people in housing market by surprise.

Many expected that as soon as rates dropped - buyers would flood back in.

But that's clearly not happening.

Investor horror story in Florida.

Bought this house in 2023 for $325,000.

Thought they could rent it out for $3,800/month.

Have since cut rent to $2,500/month. Still sitting vacant.

If they do rent it, they will be losing $8,300 annually after paying their mortgage.

Good warning of what can happen to real estate investors who buy in wrong market, at wrong time. 1) I'm seeing this more and more in Florida.

Investors who bought near the peak in 2022-2023 at sky-high valuations.

Who are now being forced to cut the rent because the rental market here has declined.

It's why many investors are now beginning to sell.

Big boy price cut in Florida.

Original List: $525,000
Current Price: $295,000

42% reduction.

Back to 2015 Zestimate levels.

Watch out as these listings make their way into comps as year goes on. Especially in markets with bloated inventory levels... 1) One of the reasons the seller on this listing had to cut so much is because of massive oversupply in the market.

Inventory in Punta Gorda is up almost 800% from pandemic low in this ZIP code.

And is double pre-pandemic levels.

Thus: you need to cut massively to sell.

Access the inventory data on Reventure App:map.reventure.app/dashboard?geo=…

Buying a rental property in America is no longer profitable.

Because the current mortgage rate (6.1%) is significantly higher than the profit/cap rate (4.4%) of rentals.

This means that any investor who uses debt to finance their purchase is likely losing money on cash flow from Day 1.

Note how from 2012-2022, the opposite was true. Cap Rates were higher than mortgage interest. Which is why so many people piled into single-family rentals.

No longer the case. 1) To get a sense of just how dire this situation is for investors, take a look at this rental listing in Florida.

It's actually owned by Invitation Homes, the biggest landlord in America.

They have it listed for rent for $2,299/month.

Blackstone taking a $75,000 loss on a house they bought in 2022.

Original purchase: $490k
Current List Price: $415k

15% haircut in two years. Probably not a good sign for home values in Florida. 1) The way we know this is Blackstone: the entity that owns the house is SFR Acquisitions 2, LLC.

This is an entity whose mailing address coincides with Home Partners of America.

A single-family rental company Blackstone bought in 2021.

Concerning signs out of the Home Building industry.

Buyer Traffic at home builder sites barely rose in September, to an index level of 27/100.

This continues to mark one of the lowest readings in the last 15 years, since 2008 crash.

Another sign that lower mortgage rates isn't having the desired effect on bringing buyers back.

Source: NAHB 1) And it's not only buyer traffic at builder sites that is lagging.

Other forward looking indicators of housing demand, including mortgage applications and google searches, are also still trending down.

Cumulatively, the forward-looking housing indicators I track are still down -9% YoY through the first half of September.

Mortgage rates are dropping.

And homebuyers don't care.

30-year fixed down to 6.20%. And mortgage apps continue to drag at multi-decade lows.

Sellers will soon realize that high prices are the impediment. 1) I think people are underestimating just how 'turned off' homebuyers are to the current market.

I did a poll on my YT channel asking if lower mortgage rates increased people's odds of buying.

So far: 5k people have voted, and 91% say no.

One major problem for the Housing Market is that homebuyers are not responding to lower mortgage rates.

Rates have dropped from 7.2% to 6.4% over the last 3 months.

And there has been no bounce back in buyer demand.

In fact - mortgage purchase applications just came in at a level -9.0% below last year. And remain at the lowest level in decades.

Rates are going to need to drop by a lot for it to make any impact on buyers. Probably into the low 5s. 1) Looking at the graph above you can see why.

While mortgage rates are lower incrementally today, they are still way higher than they were from 2018-2021, when they were in the 3-4% range.

These higher rates, combined with record high prices, makes it very difficult for households to even qualify for buying a house.

A friendly reminder that we are in the biggest housing bubble of all-time.

Inflation-adjusted home prices today are almost 100% higher than the long-term, 130-year average.

Only 2x in US history where this has ever happened: 2006 and right now.

Note how from 1890 to 2000, home prices were closely linked to inflation and never entered a national bubble. 1) This situation is not sustainable.

Either: home prices need to crash.

Or: inflation needs to skyrocket out of control.

Or perhaps some combination thereof.

Florida condo prices.

Actual listing.

Down 41% from pandemic peak. Back to 2017 levels. Still sitting on the market. 1) To be clear: prices in Florida's condo market aren't down 41% from peak overall.

However, more and more listings are popping up on Zillow and the MLS with huge price reductions.

And in some cases, we're seeing a complete erasure of the pandemic price appreciation.

Cheapest large housing markets.

By Home Value / Income Ratio.

Amazing how the Midwest is still very affordable. Locals there can buy houses at a multiple of only 3x income.

1. Pittsburgh: 2.9x
2. St. Louis: 3.3x
3. Cleveland: 3.4x
4. Detroit: 3.4x
5. Indianapolis: 3.5x

Meanwhile in California - you're paying 10x income. 1) You can access Home/Value Income data for your city and ZIP code on Reventure App.

This is a very important metric in terms of understanding the affordability fundamentals for your area.

map.reventure.app/dashboard?geo=…

Look out below in the Nashville, TN housing market.

Inventory has now breached the highest level on record, going back to 2017.

8,300 listings.

That's 60% growth in supply over the last two years, and 200% growth since 2021.

Such a dramatic inventory spike suggests prices in Nashville could drop for rest of 2024.

Access the inventory graph here: map.reventure.app/dashboard?geo=… 1) Nashville, to go along with markets like Dallas, Tampa, and Austin, are getting inundated with supply in 2024 due to declining buyer demand.

To go along with a large pipeline of builders and investors selling near the peak.

Mainstream news is talking about a "mortgage application surge".

In reality - mortgage purchase applications are down 8% from last year and 50% from pre-pandemic levels.

Homebuyer demand is still in the basement.

@CNBC - please show this graph in your mortgage articles in the future. @CNBC 1) Meanwhile - here's what the mainstream news headlines are.

Granted - some of them mention that it was refinances that increased, not purchase applications.

However, still creating the false perceptions of some type of meaningful bounce back in housing interest/demand.

If you want to get a sense for how bifurcated the US Housing Market is, look at this graph.

In the South there are now 472k active listings on the market.

109% higher than the entirety of the Northeast and Midwest combined.

Indicating that the Housing Market in the South is heading for a downturn, while the Northeast/Midwest remains resilient.

Thread explaining this situation below... 1) What's very interesting about these inventory trends is that they run counter the common narrative about where people are moving.

High level - you would think that the South should have lower inventory due to all the people moving there.

While the Northeast/Midwest should have higher inventory. Due to all the people leaving.

But that's not happening.

Condo prices in Florida are collapsing.

Seller has cut price $472k on this listing. 40% reduction from original list.

Down to a price below what they bought it for in 2020, before the pandemic spike in prices.

Worst of all: check out the HOA fee.

$2,300/month. Ouch. 1) The surging HOA fees and insurance cost are motivating lots of discounted condo sales in Florida.

Especially from part-time owners who no longer want to pay these exorbitant monthly cots to keep their unit.

The result is a "wall of inventory" hitting the Florida housing and condo market.

One week into lower mortgage rates and there has been no bounce back in homebuyer demand.

The weekly mortgage application index came in at 134, down 11% from last year.

Meanwhile - the 30-year fixed dropped to 6.55%.

Prepare yourself for low buyer demand in H2 2024 as Americans continue to boycott the housing market. 1) American sentiment on home-buying remains at one of the lowest levels of all-time.

With the Fannie Mae Housing Survey reporting that 82% of Americans said it was a "bad time to buy" in July 2024.

This was close to the worst reading in the survey's record, going back 14 years.

Inventory in Florida is now officially at its highest level in at least 7 years.

141,000 active listings in July 2024.

Up 70% from last year. And 276% from pandemic low.

These type of inventory gains are huge and suggest big downward price pressure in H2 2024. Be careful if you're buying in Florida.

Access data here: map.reventure.app/dashboard?geo=… 1) These inventory gains in Florida are being felt most in the following metros:

Tampa-St Pete (+94% YoY)
Orlando (+79%)
Jacksonville (+73%)
Miami (+72%)

The more that inventory piles up in a short span of time, the bigger the potential for price drops.

One thing that people in the housing market need to get prepared for is no bounce back in buyer demand from lower rates.

Mortgage Rates are down to 6.4%. This has only lowered the monthly house payment for buyers to $2,700/month.

In reality we need to get to $2,100-$2,200/month pmt for a real bounce back in buyers.

Getting there will necessitate a 5.5% mortgage rate and a 15% drop in prices. 1) So still a long way off before affordability is return to the market.

I think this will come as a shock to a lot of sellers, realtors, and mortgage brokers.

Buyers are not going to jump right back in just because rates dropped a bit.

Rather - there needs to be substantial progress on both rates and prices going down before demand returns.

Homebuyer demand continues to plummet in summer of 2024. Just at the peak season for new listings and price cuts.

Mortgage applications to buy a house were down -13% YoY in the last week of July.

And are down -50% from pre-pandemic norms.

Homebuyers are showing no signs of re-entering the market, even though mtg rates are dropping and Fed rate cut is in view. 1) I can't stress how consequential this is. Buyers seem completely unimpressed with the prospect of rate cuts. Doesn't seem like it's moving the needle at all to get buyers back into the market.

We'll see what happens once the Fed actually cuts rates. But for now - no one actually seems to care.

Except real estate prognosticators.

New homes for sale by region in America.

Clear where the housing bubble is: the South.

65% of all builder homes for sale are in the South, with a huge swath located in Texas/Florida.

This isn't exactly like the mid-2000s bubble. But in the South the similarities are becoming more and more striking. 1) Meanwhile - builder inventory in Northeast/Midwest is lagging far behind the previous mid-2000s peak.

Here's the comparison between regions in homes for sale v 2006.

South: +1% higher than 2006 bubble
West: -18% lower
Midwest: -62% lower
Northeast: -51% lower