BUT WE'RE GOING TO ANY WAY

MORTGAGE RATES MORE THAN DOUBLED

LAST YEAR.

THEY COULD BE HEADED EVEN HIGHER

THIS YEAR.

IT DEPENDS ON THE BOND MARKET.

IS SO IF YOU'RE A POTENTIAL HOME

BUYER, DO YOU GET USED TO THIS

NEW NORMAL

DIANA OLICK, WHAT IS THE NEW

NORMAL

>> WELL THE NEW NORMAL IS HIGHER

RATES.

THE MORTGAGE RATES DID DROP BACK

IN NOVEMBER AND EARLY DECEMBER

BUT THEY ENDED 2022 ON A HIGH

NOTE

THE AVERAGE RATE ON THE 30-YEAR

FIXED HAD SWUNG NEARLY A FULL

PERCENTAGE POINT LOWER FROM

AROUND 7.25 TO 6.25 BUT BY NEW

YEAR'S EVE IT WAS BACK OVER 6.5

AGAIN.

SO THE BUYER, TOTE'S MORTGAGE

RATE TRANSLATED INTO $2,100

WITHOUT TAXES OR INSURANCE

WHICH IS A 63% INCREASE FROM

LAST YEAR.

NOW ON THE BRIGHT SIDE, THERE IS

MUCH MORE HOUSING SUPPLY

47% MORE THAN A YEAR AGO AT THE

END OF NOVEMBER.

STILL SLIGHTLY BELOW THE

HISTORICAL AVERAGE BUT IT IS

TRANSLATING INTO A SLOWER LESS

COMPETITIVE MARKET

NOW THE HOME BIELD BUILDERS HAVE

BEEN PULLING BACK AND YOU SEE

THE HOME BUILDING ETF IS AROUND

20% FOR THE YEAR-OVER-YEAR AND

LAST JUNE WHEN RATES FIRST WENT

OVER 7%.

SO THE BIG QUESTION YOU ASK,

WHAT ABOUT THE SPRING MARKET

WHICH ISN'T THAT FAR AWAY.

ARE BUYERS SIGNIFICANTLY --

SUFFICIENTLY USED TO HIGHER

RATES AND WILL LOWER PRICES NOW

ENTICE THEM BACK INTO THE

MARKET

PRICES HAVE FALLEN 2.5% SINCE

JUNE AND WHILE THEY ARE STILL

HIGHER THAN A YEAR AGO, THAT MAY

BE NOT -- NOT THE CASE COME

SPRING

AGAIN YOU ASK IS IT A NEW NORMAL

IN MAYBE ONCE WE GET USED TO THE

6s AND GET USED TO THE 7s, I'M

NOT SURE.

>> THERE ARE TWO TYPE OF HOME

SELLERS, PEOPLE THAT HAVE LIVED

IN A HOME, 15, 20 YEARS AND THEY

HAVE A LOT OF EQUITY

THEY COULD COME DOWN IN PRICE

AND THEN YOU HAVE PEOPLE THAT

POT A HOUSE IN THE LAST TWO OR

THREE OR FOUR YEARS MAYBE TOOK

AN EQUITY LINE TO PUT IN A NEW

KITCHEN.

THEY CAN'T LOWER THEY'RE PRICE.

>> AND IT IS BEEN IN THE HOUSE A

LONG TIME, YOU'VE REFIED A LOT

AND YOU PROBABLY HAVE A RATE

AROUND 2.75%

SO YOU MAY HAVE A LOT OF EQUITY.

YOU WANT TO MOVE AND BUY

SOMEWHERE ELSE

DO YOU WANT TO TRADE YOUR 3%

MORTGAGE FOR A 6.5% MORTGAGE

RATE

PROBABLY NOT

BUT IF PRICES START TO COME DOWN

AND BUYERS START TO COME OUT

AGAIN AND START MAYBE BIDDING,

IT IS BACK AND FORTH

HOW DESPERATE ARE YOU TO SELL.

DO YOU NEED TO SELL OR WAIT IT

OUT.

WE ARE HOPING MORE SELLERS COME

ON TO THE MARKET BECAUSE RIGHT

NOW WHAT IS ON THE MARKET IS

SITTING A LONG TIME.

>> IT IS LIKE INFESTED WITH

SCORPIONS OR SOMETHING LIKE

THAT

DIANA OLICK, THANK YOU VERY

MUCH

THERE IS A REASON.

MY APARTMENT IS IN FESTED WITH

COUP WALLAS.

>> AND YOU BROUGHT ALONG A

CHART.

>> I WAS THINKING ABOUT THE

MORTGAGE RATES, OVER THE LAST 50

YEARS AND WE THINK WE HAVE THE

CHART.

THERE IT IS.

SO WE HAVE THIS IDEA MA

MORTGAGES HAVE JUST GONE BERSERK

AND IF YOU LOOK AT THE AVERAGE

OVER THE 50 YEARS IT IS 7.75%

WHICH IS HIGHER THAN WHERE WE

ARE NOW.

SO I THINK WE NEED TO REACH AN

E

EQUILIBRIUMAND THEN WE'LL STAR

TO SEE MORE TRANSACTIONS

SO I'M NOT SO BEARISH.

I THINK IT WILL TAKE SOME TIME.

>> NOT SO BEARISH, IS NOT

BULLISH.

ARE YOU BULLISH?

>> IT IS LIKE THE ENERGY MARKET.

IT IS A SUPPLY THING

THERE IS NO REAL SUPPLY OUT

THERE.

LOOK AT DHI, THIS TIME LAST YEAR

EFFECTIVELY, $108 STOCK,

ALL-TIME HIGH.

YOU THINK THIS MUST BE CUT IN

HALF

NO, IT IS TRADING $90.

IT IS TRADING REALLY WELL.

THE HOME BUILDER STOCKS HAVE

PRICED SO MUCH NONSENSE IN I

THINK THEY'RE WORTH LOOKING AT

HERE.

>> THE FLY IN THE OINTMENT IS

WHERE RATES ARE GOING.

I'M NOT GOING TO TELL YOU

THEY'RE GOING TO 5% BUT I'M NOT

SURE THEY'RE GOING TO 3%

THE YIELD CURVE TARGETING IS

OVER AND EUROPEAN YIEL