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Eric & Matt Gausepohl

Summit Lending
NMLS#: NMLS# 339255
Phone: 800-774-7650
Real Estate Market Insider 6/10/2024
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This Week's
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(by Sigma Research)
Real Estate Report

Real estate metrics reveal a shocking statistic

Price per square foot. It’s a measure used mostly in the construction industry. But when you study how much this metric has changed in a mere five years’ time, it just might knock your socks off.

“A home’s price per square foot is a somewhat overlooked real estate feature. When shopping for a house, buyers are usually focused on the total size, list price, and location,” says Realtor’.coms Margaret Heidenry. “But price per square foot is now grabbing some rare attention: The latest monthly housing report from reveals that the typical listed price per square foot grew by a whopping 52.7% from May 2019 to May 2024.” She contrasts this with how the typical listed home price increased by 37.5% over the same period to its current nationwide median of $442,500.

Ralph McLaughlin, Realtor’ senior economist, says the price-per-square-foot metric is an important one to pay attention to. “The change in that metric is a more solid measure of how much more a home is worth over time than looking at changes in median list price.”

Bottom line? A home’s median list price can rise or fall without accurately reflecting what’s really going on in the market. “The median list price can fluctuate even if the market is stable,” McLaughlin explains. “For instance, an increased share of smaller homes on the market could lower the median list price without affecting the overall value of homes.”

The biggest growth in price per square foot reveals substantial growth in popular metropolitan areas such as New York City (+84.7%), Boston (+72.9%), and Nashville (+68.6%) since May 2019. Heidenry explains that the soaring price per square foot in New York City and Boston can largely be attributed to the COVID-19 pandemic-era shift in working norms. Citing's senior economic research analyst Hannah Jones. As remote and hybrid work arrangements became more common, buyers flocked to areas that offered both more bang for their buck and a reasonable commute.

“This increased demand farther from urban downtowns led to scarce inventory and rapid price growth around New York City and Boston, particularly for homes that offered additional space to set up a home office,” says Heidenry.

Why Nashville? Another pandemic boomtown, Nashville got mobbed by homebuyers in a bid for more space at relatively more affordable prices as buyers from high-priced areas flocked to affordable Sun Belt metros. Demand created low inventory and climbing prices. And while inventory levels have recovered significantly in the area, home prices have not softened.

As for markets where the lowest return on price per square foot, look to Detroit, Baltimore, and San Jose, where growth remained under 27% per square foot.

The reason price per square foot is a crucial metric in real estate is that it allows for easy comparison between different properties, regardless of their size. “This helps buyers and sellers determine whether a property is priced appropriately for its location and condition,” says Heidenry. “Additionally, price per square foot helps in assessing market trends, indicating whether prices in a particular area are rising or falling.”

A rule of thumb, however: While price per square foot is valuable information, it can be deceiving. A smaller home can have a higher price per square foot versus a larger one, and that can skew the numbers – which is why most agents use comparable (comps) to provide a more complete idea of a home’s value. This takes into account the home’s condition, upgrades, location, lot size, and other features to make a more informed decision.

Realtor, TBWS

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market improved by +8 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week: 1) The Fed, 2) Inflation and 3) Central Banks.

1) The Fed: We will get the Fed's latest Interest Rate Decision and Policy Statement this Wednesday at 2 pm ET, followed by a live presser with Fed Chair Powell at 2:30 pm. The bond market will focus on their release of their Economic Projections.

2) Inflation: We will get both CPI and PPI this week with the markets giving the most weight to MOM Core CPI Wednesday morning. Bond yields are very sensitive to changes in inflation.

3) Central Banks: We will hear from the Bank of Japan on Friday which had increased their key interest rate two meetings ago.

Treasury Auction: Here is this week's auction schedule with Thursday's 30Y auction getting the most weight from bond traders:

06/10 3 year note

06/11 10 year note

06/13 30 year bond

This Week's Potential Volatility: High

This morning markets are moving sideways. Volatility has started at moderate levels with choppy trading in a narrow channel. Volatility will increase later in the week.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Eric & Matt Gausepohl

Summit Lending has over 15 years of experience in the mortgage industry. We are here to help home borrowers arrange mortgage finances while explaining the complicated procedure of any type of home loan in it's simplest terms.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.