Hello my friends. Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. So today I am recording on the morning of Thanksgiving. So to everybody listening, happy Thanksgiving or Belated Thanksgiving. I wanted to do a quick episode here on Housing Trends. In fact, I might actually turn this episode format into a monthly episode. I'm thinking about it and I'll just do a housing trends at least quarterly, but possibly every month. And I was thinking of calling this episode not entirely seriously, the good, the bad and the ugly, but there really isn't a lot that I would call ugly. But there are some dynamics in play that will not make the next year or two all that attractive for some people in some markets. And I, I'll talk about that. But I just wanted to give you a quick episode with a snapshot on what is going on with the economy and housing in general across the US and maybe spotlight two or three different markets towards the end.

And I might do that on an ongoing basis so that way you have an idea of what's going on potentially in a large market, like a tier one market, a smaller market like a tier two type of market, and possibly a focus on one of the markets that we are in. So if you like this type of content and you'd like to see me do a housing Trends type of episode every month, or at least every quarter you can let me know, just shoot me an email or drop me a quick message from our website at passive real estate investing.com. You can click on the contact or the Ask Marco link and just let me know. But my intention is to do that going forward. So you don't necessarily need to let me know, but I'm happy about suggestions.

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If you missed our last episode, be sure to listen to Ask Marco – A Great Reminder for Investors, Analyzing the Numbers, Time Old Rent or Buy Question

Okay, let's begin with mortgage rates.

Last week we saw the largest drop in mortgage rates in 41 years. We had a 0.47% drop, almost a half a point, and that was pretty substantial. The main driver for that was really just headline inflation was subsiding. And so that was considered good news in the markets and because of that, we saw mortgage rates start to decline. And I think that's gonna be a little bit of a trend unless there's something big that comes along that pushes it back in the other direction. Some of the other largest mortgage rate drops in history happened in the early 1980s. Really, there were three of them that happened in 1980, specifically in May where we had drops of 0.5 3.78 and as large as 1.23%. That's a huge drop in mortgage rates, but that was a long time ago. But I'm happy to see mortgage rates starting to decline.

And hopefully over the next six 12 and even 18 months, we'll see mortgage rates continue to go down and that'll help people with affordability as well as investors looking to get cheaper debt financing on their investments. And speaking of inflation, it is still up there. The core CPI or consumer price index is floating around 6.4%. The cpi, including all items, is at 8.1%. The good news is it's slowly coming down, so it'll take a while, but we are seeing some contraction in consumer demand and that will ultimately lead to lowered inflation because the demand will take away the upward pressure on pricing across the board, including housing, which I will get to here in a moment. So today I think it's realistic to essentially lower our housing outlook for the next three, six, and maybe even 12 months. Things have been, I guess, deteriorating a little faster than many of us have expected.

So the backdrop about six months ago was one thing, but today things are looking a little bit more sluggish. And so about six months ago, mortgage rates were floating around the 5% mark. The core CPI was around 6%. And the general feeling was that there was a good chance of recession late in the year,