Going Back to Work Later in Life and Why the Housing Market Feels So Stuck

21:30What I would like to say to any younger viewers is please put away any amount of money you can monthly, even if it's$20. It's just amazing how much it adds up. And, you know, forget a couple of coffees every day or something like that and get that money. I think it's just so important. And I really didn't think about that as much as I should have as a younger person. That's powerful. But guess what? It's never too late to rectify. And you're doing all the things that you need to do now. So well done, Claire.

21:55Ryan Sterling:Claire, that's a really good point in a lot of different ways. So, you know, number one, I tell you, we come across people in their 40s who say, I started too late. It's never going to happen. And I laugh. I say, are you kidding me? You have more than enough time to get started. So I just I love the point of like it's just it's never too late to get started. And it's never too little. I think a lot of people think, oh, I have to put a lot in. I mean, just a little bit every month is going to make a big difference in my mind. Huge, huge. There's a quote out there. I can't remember who it's attributed to, but it's we overestimate what we can do in a year and underestimate what we can do in a decade.

22:31Ryan Sterling:To your point, you know,$20 here and there at a time, it doesn't seem like it's making a difference. But compound that over years and decades, and it makes a massive difference. So, again, little marginal improvements today for someone who's listening, who's in their 20s, 30s, 40s, even 50s. It does make a difference. It's never too late to start. But number two, you know, and I see this a lot, and this is something I do think it's important to address. And I was actually just having this conversation this past week about the importance of not just a prenup, but a postnup. And I especially see that where there's a married couple and one spouse is leaving the workforce.

23:14Ryan Sterling:Right. And I feel like that's an especially important time to say, hey, if I'm leaving the workforce, we need to do a postnup because that's leaving the spouse who has left the workforce. that's leaving them very vulnerable if something happens in the future. I also think it's important too that, you know, while people are building wealth together as a couple, you still need to look out for yourself. And again, I'm a fan of building assets together, but you do again have to make sure that everything from your asset base, making sure that your retirement accounts are being maxed out to make sure that your skills are being sharpened.

23:53Ryan Sterling:And once again, if you are in a place where you are leaving the workforce and those skills are going to dull over time and it's going to be hard to kind of get ramped back up, there has to be some sort of post-nup in place because you have to look out for yourself. That's a good idea. I'm sure there would be a lot of couples that that could be pretty tough to accomplish, but very good recommendation. Well, Claire, we've covered so many bases during this episode. What do you think your next steps will be? Well, I've given myself till fall to go back to work. And so I'm just figuring out what I'm going to do.

24:28I mean, I could go back as a loan officer. I could do any number of things, but I wanted to just keep it where I work outside the home and come back and don't have to work anymore. So I'm going to do that by fall and then speak with the investment advisor and see where I stand. And my plan is not to touch that money and in fact, maybe make it bigger till the RMD happens. I love that. And one more thing, I was just having a rant with Sean and our producer or tests about how we're expected to work for 50 or 60 years. And sometimes it can get so hard and difficult. And I know you touched on saying if you didn't have to work that you wouldn't.

25:02So how are you going to kind of keep yourself motivated for however many more years that you need to work? I think it's going to depend on what job I'm in. If I did end up back in my loan officer position, it'll be hard to motivate myself because it takes a lot of work to do that. And I don't know that I'm really up for that. I would have to be up for it if I do it. But another job that maybe I just would enjoy more, it would be much easier to motivate myself. You see what I mean? Yeah. Well, Claire, thank you so much for your time. Thank you so much for helping me. And I really want to thank you, Ryan, for all the help that you gave me because it's very valuable information.

25:34Ryan Sterling:Oh, my pleasure. So great to meet you, Claire. And you're doing all the right things. Ryan Sterling, advisor at NerdWallet Wealth Partners. Thank you again for coming on and joining us. If folks want to learn more about NerdWallet Wealth Partners, we have a link in the episode description. And Claire, we love when people give us updates. So please let us know how it goes. I will. Six months, a year, however far from now, we'd love to hear your progress. I will do that. And please, all those younger listeners, put money away right now. You heard Claire. Up next, this week's money news. Stay with us.

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28:45The average copay for Rula patients is$15, but depending on your benefits, your copay could be as little as$0 per session.

28:53Ryan Sterling:Rula partners with a network of over 15 ,000 therapists and psychiatrists nationwide, enabling you to find your personalized solution and the right therapist for you based on your needs, preferences, and state requirements. Thousands of people are already using Rula to get affordable, high-quality therapy that's actually covered by insurance. Visit Rula.com slash smartmoney to get started. That's R-U-L-A dot com slash smartmoney. You deserve mental health care that works for you, not against your budget. Time now for our weekly Money News Roundup, where we break down the latest in the world of finance to help you be smarter with your money.

29:27Today we're talking about the not-so-great home-buying season that we've all been experiencing. and why it was years in the making. Our news colleague, Ana Helhosky, is back to talk about it. Hello. Hi. Hey, Ana. Hey, Sean. Hey, Elizabeth. So, yeah, August is in full swing, and that means that the traditional home buying season is winding down. Now, the latest data from the National Association of Realtors shows just how sluggish the market has been. Mortgage rates rose from June to July, while existing home sales fell 1.7 percent. But there's a little bit more to this story. Existing home sales were up 0.9 % from a year earlier.

30:04And that means that July 2026 was still better than July 2025. And that's largely because mortgage rates are lower now than they were at the same time last year. But for buyers who spent the spring and summer frustrated by a shortage of homes for sale, there's still one big reason that the market feels stuck. And it goes back to the pandemic. Millions of homeowners locked in historically low mortgage rates in 2020 and 2021. and five years later, many aren't willing or able to give them up. Today, we're looking at how that pandemic mortgage boom is still shaping the housing market. New NerdWallet research shows just how dramatically conditions have changed for buyers.

30:40We're joined by mortgage writers, Abby Doyle and Kate Wood. Welcome back, you two. Oh, thanks, Anna. Thanks. Happy to be here. So Abby, take us back to 2020 and 2021. What was so unusual about mortgages then? So mortgage rates got really low. In 2020, the average rate on a 30-year fixed rate mortgage fell below 3 % for the first time ever, and it generally stayed there until around September 2021. So people rushed to buy, millions of existing homeowners refinanced, and they were locking in these incredibly cheap loans. And a huge number of those loans are still on the books. Almost half of outstanding mortgages today have a rate of 4 % or less.

31:22And that's according to Realtor.com's analysis of federal data. Now, Kate, NerdWallet has some new original research that really puts that moment into perspective. So tell us about the new Home Buying Climate Index. We've just launched this new stat. Basically, every month, the NerdWallet Home Buying Climate Index gives the national market a score and a sort of weather forecast comparison based on how favorable or not favorable conditions are for buyers. So we look at five major data points, mortgage rates, no surprise, home prices, incomes, unemployment, and new construction. So we put all of these together to kind of give you a snapshot of the housing climate at the moment.

32:01And then we can also take a look historically. So if we turn the clock back to the pandemic, what did the forecast look like at that point? It was beautiful, right? It was sunny. It was gorgeous, right? Just perfect. Get outside weather. March 2021 had the best home buying climate index in over 30 years of data. So the number is out of 100. March 2021, it was at 89.5, right? So as Abby mentioned, that was when we were kind of coming to the end of this brief window of mortgage rates hitting historic lows. But, you know, wider context at that time, unemployment was falling. We might remember personal incomes were getting a boost.

32:39We were getting those pandemic stimulus checks. and also, you know, builders were starting to get moving again and pull more permits. Right. We were just in a very different environment that we are now. So what happened next? Very different. Very different. So then we get 2022, which saw a real reckoning for the housing market. So all of that competition that Abby was talking about, people buying like crazy in 2020, 2021, that had sent home prices skyrocketing. At the same time, we've got the Federal Reserve realizing, oh, OK, you know, this post-pandemic inflation isn't going to be, their preferred word is transitory, but basically it's going to be sticking around.

33:15So we've got the Fed raising the funds rate and we've got mortgage rates shooting up too. Housing affordability is deteriorating pretty quickly. In a normal environment, you'd expect that higher mortgage rates would lead to some kind of softening of prices, right? The sellers would have to budge, but that did not happen. And our index plunged, right? You see this steep drop off in 2022. the clouds come rolling in. And we've seen conditions bounce around since then, but we have not come close to that 2021 peak or really even to where we were before the pandemic. And that sunny 2021 market is casting a pretty long shadow on today's market.

33:54And the people that scored those great mortgage rates then are now part of the reason that today's buyers feel so stuck. How does that happen? Basically, they've got a deal that's too good to give up. So say you have one of those 3 % mortgages. You want another bedroom or you'd like to move closer to family. And selling your house means giving up that 3 % mortgage rate and taking on a new mortgage closer to 6 % or 7 % these days on a home that probably costs more too. That's the mortgage rate lock-in effect. You can afford to stay, but you might not necessarily be able to afford to move. And that's why people call it the golden handcuffs.

34:33So Kate, can you actually see that lock-in effect in the mortgage data? You really can. And as a huge mortgage nerd, this is something that I find actually really fascinating. So historically, if you're looking at existing mortgages, your biggest group of outstanding mortgages, so loans that people are still actively paying off, right, is always about one to four years old. And that makes sense, right? You're always going to have new buyers. You're always going to have people refinancing. There's always going to be new loans. But recently, we've seen this shift where that is no longer the case.

35:03So again, And looking to this realtor.com analysis of data from the Federal Housing Finance Administration, right now a record high, 41 % of outstanding mortgages are five to seven years old. And that is these people who are hanging on to these 2020-2021 vintage loans, right? And so that compares to loans that are one to four years old at 29%. Normally, again, that's the largest group. So we are really seeing this huge wave of these pandemic era mortgages just sticking around, which means, OK, sure, those people aren't refinancing. We would expect that. But they also are not selling. Right. These loans are just not going anywhere.

35:47And really, you know, if we stay in this state in a few years, potentially we're looking at mortgages that are 10 to 12 years old, probably being a larger proportion of existing loans than we would have ever seen before. So we already have this giant group of homeowners holding mortgages from a completely different interest rate universe, and it's probably going to get bigger? It's not necessarily going to get bigger. It's that the largest group of existing loans is likely to keep getting older, right, rather than the kind of newest cohort of loans always being the bulk. And the reason that we're seeing this is because the rate that someone has versus today's prevailing rates really have a profound effect on whether people are going to sell.

36:28Researchers at the Federal Housing Finance Administration a couple years ago found that for every percentage point that your mortgage rate is below today's going rate, your likelihood of selling is going to drop about 18%. So think about Abby's example a minute ago of someone who's got roughly a 3 % mortgage rate. Even if we kind of ignore after that decimal place, we're still looking at someone who's roughly three solid percentage points off of today's rates. So looking at that FHFA research, that person is so much less likely to sell, right? So if every percentage point drops your likelihood of selling 18%, we're doing that additively.

37:06Someone who is three percentage points off prevailing rates is more than 60%, if we put it all together, more than 60 % less likely to put their home on the market. And if you're a first-time buyer looking right now, or if you bought in the past couple years like I did, it's really easy to be like, oh, boohoo, champagne problems, your mortgage rate is too low. But having that low mortgage rate really is a burden for today's existing homeowners. Maybe your family's grown and you need more space, or maybe you're retired and you're like super ready to downsize. But then you look at the payment on your next house and you're like, I literally can't make this work.

37:46And a lot of people who do sell right now and are giving up those great rates are selling because life forces the issue, something like a death or a divorce or relocating because of a job. Otherwise, staying put may make the most financial sense. I can't help but think about the overall availability of homes. When enough homeowners are staying put, there are going to be fewer homes for everybody else. Exactly. And in this case, we are literally talking millions of fewer homes. So same FHFA researchers looking at this mortgage rate lock-in effect, they estimate that from like mid-2022 to mid-2024, rate lock-in prevented about 1.7 million home sales.

38:28So these are homes that theoretically probably should have changed hands. And then here's the even bigger twist. Higher rates just on their own, which is exactly what we were seeing in that 2022-2023 time period, those should have pushed home prices down about 6%, right, on their own. They should have been depressing prices. But rate lock-in was squeezing supply so much that that in itself was pushing prices up about 7%. So that's where that price relief went. It was completely wiped out by this lack of inventory. So higher rates made mortgages more expensive and helped keep home prices high. Yeah, it is quite the one-two combo if you're a homebuyer.

39:09So if lock-in's keeping this many homes off the market, Abby, what could actually help loosen things up. Long term, we need to build more affordable homes. And that's why you've heard us talk about the 21st century Road to Housing Act the last couple times we've been here. No, no. Housing supply is basically our favorite recurring character at this point. Pretty much. And this landmark new housing law is designed to make it easier and cheaper to build new home. But like we've said before, those changes are going to take years to play out. I'm actually starting to think about buying something. So now this is kind of scaring me off.

39:43What if you do want to buy now? So if you do want to buy now and you're looking for practical advice, I'd say be disciplined, but stay flexible. First, know your must-haves and know your deal breakers. So that way, limited inventory doesn't make you feel pressured into a compromise that isn't the right fit for you. And then figure out where you can flex. Maybe you're flexible on exactly which neighborhood you want to buy in, or maybe you start looking at new construction, or maybe you're looking at a townhouse or a condo instead of a detached single-family home. And finally, of course, be ready.

40:19Have your finances lined up. Have your pre-approval ready. So that way, when a good listing appears, you're all locked in and you're ready to move quickly. All right, that's some helpful advice. Now, Kate, let's bring it back to NerdWall's Home Buying Climate Index. What does the data tell us about where buyers stand today? So nationally, the forecast is partly cloudy. Yes, it's a long way from the sunshine of 2021, but it is also a very long way off from our absolute bottom of the index, which is back in 1991 when you're glad you weren't buying a home back then, right? Something that's really important to remember, though, is that this is a national level statistic.

40:56So we are looking at this weather, so to speak, for the entire country, not the forecast for your local zip code. Depending on where you live, you might have more inventory, less competition. You might have more room to negotiate. That's something I was definitely hearing the other week talking to loan officers at the mortgage brokerage that we own, actually, next door lending. For me personally, I'm in Connecticut. My market's terrible. I would say it's worse than the national level. In any event, this is why I would really recommend checking out the Home Buying Climate Index on nerdwallet.com.

41:27When you look at the visuals, you look at the different graphs, this whole shift that we're talking about is pretty much impossible to miss. You can really see that we have this extraordinary outlier in that pandemic era market. We've got this plunge in 2022. And yes, we're not, you know, where we were even pre-pandemic now, but also things have been a lot worse. Also worth noting, we are updating the index every month as rates change, prices change, the economy itself changes. You can keep checking the forecast to see whether conditions are getting sunnier or if there are some more clouds on the horizon.

42:00All right. We'll put a link to NerdWallet's Home Buying Climate Index in the show notes. I know that I will be keeping track of it myself. Abby and Kate, thanks so much for joining us. Thanks, Ana. Oh, always a pleasure.

42:09Ryan Sterling:And thank you, Ana. And that's all we've got for this episode. Remember, folks, that we nerds run on your financial questions, so send them our way. You can call us or text us on the Nerd Hotline at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdballet.com or leave us a comment on Spotify or YouTube. We would love if you could join us next time to hear about appropriately to this conversation, saving for a home when you want to retire early. Follow Smart Money on your favorite podcast app that includes Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.

42:45We're also on YouTube.

42:47Ryan Sterling:Here's our brief disclaimer. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. Some companies mentioned in this episode may be NerdWallet partners, but it does not influence how we talk about them. And with that said, until next time, turn to the nerds.

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