McCargo initially served as the senior advisor for housing finance at the Department of Housing and Urban Development (HUD) under former Secretary Marcia Fudge. Before that, she was vice president for housing finance policy at the Urban Institute. McCargo also held various leadership positions at CoreLogic, JP Morgan Chase, and Fannie Mae. Under her leadership, … [Read more…]
Were the good old days really all that good? Sure, when mortgage rates were below 3%, it was a lot cheaper to purchase a house, but we were also in the middle of a global pandemic.
At the start of 2021, the average rate for a 30-year fixed mortgage was 2.65%, according to data from Freddie Mac. During the homebuying boom of 2020 and 2021, the number of borrowers taking out new mortgages reached a more than two-decade high.
Over the past two years, a combination of high mortgage rates, low housing inventory and sluggish wage growth has crippled affordability for homebuyers.
While many are holding out for mortgage rates to fall, it’s unlikely we’ll see 2% mortgage rates any time soon. In fact, experts hope we don’t.
A return to that kind of low-rate environment would indicate major problems in the economy, said Alex Thomas, senior research analyst at John Burns Research and Consulting.
Mortgage rates typically fall during a recession. But a recession also comes with widespread unemployment, increased debt, investment losses and overall financial instability.
In today’s housing market, homebuyers should have realistic expectations. Experts predict mortgage rates to inch closer to 6% by the end of the year as inflation cools and the Federal Reserve starts to cut interest rates. Record-low mortgage rates aren’t in the cards again, and that’s likely for the best.
Mortgage rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
How did mortgage rates drop below 3% in the first place?
Economic uncertainty and market volatility — whether during an election cycle or a pandemic — impact the direction of mortgage rates. It’s often said that bad news for the economy is good news for mortgage rates, and vice versa.
A significant lever for mortgage rates is the federal funds rate, which the Fed keeps low when it needs to stimulate economic growth. For example, during the 2008 financial crisis, the Fed slashed that benchmark rate to zero to bolster the economy. When there were signs of recovery in 2015, the central bank started raising interest rates again, sending mortgage rates into the 4% to 5% range until 2020.
The COVID-19 pandemic sparked another economic crisis. To incentivize people to borrow and spend money — and avoid a prolonged recession — the Fed once again cut the federal funds rate to near zero and pumped money into the economy by purchasing government bonds and mortgage-backed securities. Mortgage interest rates fell quickly, bottoming out in the mid-2% range in 2021.
But the combination of supply shocks, record-low rates and an extreme increase in money supply from government stimulus helped send prices way up, according to Erin Sykes, chief economist at NestSeekers International.
In early 2022, the Fed had a new problem on its hands: inflation.
💰 Federal Reserve monetary policy
In a recession, the Federal Reserve tries to spur economic growth through quantitative easing, a monetary policy that consists of cutting the federal funds rate to encourage lending and borrowing to consumers, and increasing its purchase of government-backed bonds and mortgage-backed securities.
If the Fed needs to slow the economy down and reduce the money supply in financial markets, it does opposite: quantitative tightening. By increasing the federal funds rate and tapering its bond-buying programs, the central bank raises the cost of borrowing money, which puts upward pressure on longer-term interest rates, like 30-year fixed mortgage rates.
What caused mortgage rates to surge again?
With prices surging in 2022, the Fed’s main tool was to adjust interest rates, making credit more expensive and disincentivizing borrowing. As a result of a string of aggressive rate hikes, the federal funds rate went from near zero to a range of 5.25% to 5.5%, where it’s remained since last summer. Average mortgage rates skyrocketed, peaking past 8% last October.
Although inflation has gone down, the Fed isn’t ready to start lowering rates just yet. The central bank would like to see evidence of a weaker economy (including consistently lower inflation and higher unemployment) before making any adjustments to its monetary policy.
📈 How the Fed impacts mortgage rates
Though the Federal Reserve doesn’t directly set mortgage rates, it controls the federal funds rate, a short-term interest rate that determines what banks charge each other to borrow money. When the federal funds rate moves up, it impacts longer-term interest rates, like 30-year fixed mortgage rates, as banks raise interest rates on home loans to keep their profit margins intact.
Why won’t mortgage rates move toward 2% again?
Economists and housing market experts agree that mortgage rates will fall over the next several years, but not below 3%.
When mortgage rates hit their record lows just a few years ago, the federal funds rate was near zero. As the Fed starts cutting rates later this year, the plan is to do so slowly and incrementally. Barring another major economic shock, the Fed projects the federal funds rate will take only modest adjustments down.
In the most recent policy meeting, Fed Chair Jerome Powell remarked that the federal funds rate “will not go back down to the very low levels that we saw” during the financial crisis, suggesting that the economy can adapt to a more “neutral” benchmark rate range of between 2.4% to 3.8% in the long run, i.e., less tightening, but not too much easing from the current range of 5.25% to 5.5%.
The Fed would be forced to lower rates close to zero only if there were a dramatic economic shock, such as a pandemic or recession, said Selma Hepp, chief economist at CoreLogic. In that case, if the central bank started purchasing government bonds and mortgage-backed securities again, there’s a possibility mortgage rates could return to those record lows.
However, without such an upheaval, there’s a floor under how low mortgage rates will go, and it’s highly unlikely they’ll ever drop to their 2020-2021 levels.
“With the Federal Reserve ending quantitative easing and stepping out of the market for mortgage-backed securities, rates will settle at a much higher level,” said Matthew Walsh, housing economist at Moody’s Analytics.
Moody’s Analytics predicts mortgage rates will stabilize between 6% and 6.5% over the next few years. That’s high compared with the recent past, yet it’s a historically normal range for mortgage rates.
How can homebuyers adapt to higher mortgage rates?
The housing market is frustrating, but prospective homebuyers are starting to come to terms with this new reality. Following the pandemic, people are moving on with their lives, whether that’s building a family, relocating, downsizing or upgrading.
For some households, that means making room in their budget for a monthly mortgage payment at a 6% or 7% rate.
When you monitor mortgage rate movement, you’re usually looking at national averages determined by weekly rate information provided by lenders. While those rates give a picture of the “typical” mortgage rate, that’s not necessarily the rate you’ll get when applying for a mortgage.
It’s possible to get a better deal on your mortgage.
To qualify for a mortgage, most lenders require you to have a minimum credit score of 620, but lenders offer the lowest mortgage rates to consumers with excellent credit scores, around 740 and above.
You might also consider purchasing mortgage points, also known as discount points. This is an extra fee you pay upfront in exchange for a lower interest rate. Each mortgage point typically costs 1% of the purchase price of a home and will lower your mortgage rate by 0.25%.
A shorter-term loan like a 15-year or 10-year mortgage will have a lower interest rate than a 30-year fixed mortgage. Your monthly payments will be higher with a shorter-term loan because you’re paying the loan off in less time, but you’ll save big on interest.
Buying a home is likely the biggest transaction you’ll make in your lifetime. Regardless of the market, carefully assess your needs and what you can afford.
The Consumer Financial Protection Bureau (CFPB) on Wednesday released a new edition of its Supervisory Highlights publication, which includes the agency’s actions to combat what it calls “junk fees charged by mortgage servicers, as well as other illegal practices.”
Examinations conducted by the bureau found mortgage servicers levied charges it deems “illegal,” including prohibited property inspection fees, the issuance of “deceptive” notices to borrowers, and violations of loss-mitigation rules. Financial institutions refunded these fees to borrowers based on CFPB findings and “stopped their illegal practices,” the agency said.
“Homeowners cannot just simply switch providers if their mortgage servicer charges them illegal junk fees,“ CFPB Director Rohit Chopra said in a statement accompanying the new publication. “Since mortgage borrowers are captive to a company they never chose to do business with, we are working hard to detect and deter violations of law.”
In addition to these findings, the bureau also claims that certain mortgage servicers failed to waive certain late fees and penalties that stem from challenges faced by borrowers during the COVID-19 pandemic. The agency also asserted that deadlines to pay property taxes and homeowners insurance were impacted.
“Mortgage servicers that accepted or required money from borrowers to pay taxes and insurance failed to make those payments in a timely manner, which caused some borrowers to incur penalties,” the bureau stated. “Servicers only took responsibility for those penalties for missed on-time payments if homeowners submitted complaints.”
Among the allegedly deceptive notices sent to borrowers include statements that certain borrowers in financial distress “had been approved for a repayment option,” when the reality was that “no final decisions had been made, and some of the homeowners were ultimately rejected.”
CFPB examiners also found servicers sent some homeowners “false notices saying that they had missed payments and should apply for repayment options,” and that servicers also “improperly denied requests for help and failed to evaluate struggling borrowers for repayment options as required under the CFPB’s mortgage servicing rules.”
The bureau added that mortgage servicers are taking corrective actions, including changes to certain policies and procedures. Servicers are also providing refunds for any issues related to fees, the agency said.
“The CFPB has been looking at ways to streamline mortgage servicing rules, while making sure mortgage servicers fulfill their obligations to treat homeowners fairly,” the bureau added.
The number of U.S. citizens flying to international destinations reached nearly 6.5 million passengers in March, according to the International Trade Administration. That’s the highest March total in over five years and shows that the post-pandemic “revenge travel” trend is the new normal.
It wasn’t just March, which usually sees a spike in international departures for spring break. In every month of 2024 so far, more Americans left the country than last year and 2019. These trends point to a blockbuster summer for overseas travel.
Nearly half of Americans (45%) plan to travel by air and/or stay in a hotel this summer and expect to spend $3,594 on average, on these expenses, according to a survey of 2,000 U.S. adults, conducted online by The Harris Poll and commissioned by NerdWallet.
That’s despite rising travel prices that have caused some hesitancy among would-be travelers. About 22% of those choosing not to travel this summer cite inflation making travel too expensive as a reason for staying home, according to the poll.
So where are traveling Americans going? And what does it mean for those looking to avoid crowds of tourists and higher travel prices?
New travel patterns
Nearly every region in the world saw an increase in U.S. visitors in March 2024 compared with March 2023, according to International Trade Administration data. Only the Middle East saw a decline of 9%. Yet not every region saw the same year-over-year bump. U.S. visitors to Asia saw a 33% jump, while Oceania and Central America each saw a 30% increase.
Comparing 2024 with 2023 only tells part of the story, however. The new patterns really emerge when comparing international travel trends to 2019. For example, Central America received 50% more U.S. visitors in March 2024 compared with March 2019. Nearly 1.5 million Americans visited Mexico, up 39% compared with before the pandemic. That’s almost as many visitors as the entire continent of Europe, which has seen a more modest 10% increase since 2019.
Only Canada and Oceania saw fewer visitors in March 2024 than in 2019, suggesting that interest in these locations has not rebounded. Indeed, the trends indicate a kind of tourism inertia from COVID-19 pandemic-era lockdowns: Those destinations that were more open to U.S. visitors during the pandemic, such as Mexico, have remained popular, while those that were closed, such as Australia, have fallen off travelers’ radars.
Price pressures
How these trends play out throughout the rest of the year will depend on a host of factors. Yet, none will likely prove more important than affordability. After months of steadiness, the cost of travel, including airfare, hotels and rental cars, has begun to sneak up again.
About 45% of U.S. travelers say cost is their main consideration when planning their summer vacation, according to a survey of 2,000 Americans by the travel booking platform Skyscanner.
That’s likely to weigh further on U.S. travelers’ appetite for visiting expensive destinations such as Europe, while encouraging travel to budget-friendly countries. It could also depress overall international travel as well, yet so far, Americans seem to be traveling more.
For those looking to avoid crowds while maintaining a budget, Skyscanner travel trends expert Laura Lindsay offered a recommendation many of us might need help finding on a map.
“Albania has been on the radar of travelers looking for something different,” Lindsay said. “Most people have yet to discover it, but flights and tourism infrastructure are in place, and there are fewer crowds in comparison to trending European destinations like Italy, Greece, or Portugal.”
On the flip side, American travelers looking to avoid crowds of compatriots would do well to avoid Japan, which has seen a staggering 50% increase in U.S. tourists between March 2019 and 2024.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2024, including those best for:
Frankly, however, the biggest surprise at the moment might be that sales volumes have held up pretty well over the past few weeks even as mortgage rates have climbed into the mid-7s. We’ve been talking about sales growth over the past year. More home sales are happening, but we can also see — once adjusted for seasonal patterns — that sales should be much higher now if a real market recovery were underway.
It feels like the latest macro trends will keep mortgage rates in the mid-7% range for the near term. And we’d expect that to slow home sales further. That’s why Altos Research tracks every home for sale in the country each week. The data so often defies expectations or changes very quickly. Let’s dig further into the details of the U.S. housing market for the week of April 22.
Housing inventory
When we look at the active inventory of unsold homes on the market, we can definitely see the impact of higher mortgage rates in the past month. There are 543,000 single-family homes on the market now. That’s a 3% jump from last week and 31% above year-ago levels.
The available inventory of unsold homes on the market is building quickly due to the most recent mortgage rate jumps. There are 130,000 more homes on the market now than last year at this time.
Normally, inventory is climbing at this point in the second quarter. We’re rapidly approaching the peak of the market in terms of seller listings, and as inventory builds, the sales rate will peak by the end of June. So, it’s normal that inventory is growing now.
But when you add a spike in mortgage rates that makes homebuying less affordable, that leads to fewer buyers and inventory grows. Altos data currently shows an inflection point in April. With the most recent mortgage rate jump, inventory growth has also accelerated.
This is what is meant when we say that higher rates leads to higher inventory. We are on the path back to the formerly normal levels of unsold homes on the market. A couple more years with elevated rates will get us there.
But it’s also noteworthy to point out that falling rates reverse this trend. Lower rates mean that people snap up the existing inventory.
New listings
Growing inventory is not just about slowing demand. We are also consistently measuring more sellers coming back into the market. At 69,000 new listings unsold today, that’s 3% more than a week ago and 14% more than this time last year.
In fact, there are more new sellers this week than in any week of 2023. This selling season still has two more months of growth potential. Industry professionals would love to see 70,000 or 80,000 new listings per week in May. More sellers means more sales can happen. There’s a limit, of course, as we could eventually reach an imbalance if too many sellers flood the market and too few buyers follow suit. But we’re not close to that yet.
In the years before the COVID-19 pandemic, the latter half of April would normally see 80,000 to 100,000 new listings in a week. Now we’re at 69,000. Obviously, elevated mortgage rates slows both buyer and seller activity. There are a lot of people who will never sell their house with a 3% mortgage.
There’s unlikely to be a flood of sellers in the next few years, but we can see steady growth. Each year with higher rates will create more inventory growth and have fewer people locked into low rates. That growth is good for the market.
The available inventory of homes to buy and the new ones being listed for sale each week are what consumers care about. If I’m buying a house, do I have any houses to buy? For homebuyers, the selection they have now is the most they’ve had in years.
Real estate professionals, on the other hand, have to care about transaction volume. How many home sales are happening? Because there were so few sellers last year, the number of sales was quite constricted. That’s starting to change. The 14% increase in new listings over the past year is a really good sign that sales can grow.
Pending sales
When we look at the sales rate, we can indeed see that home sales are growing. There were 71,000 new contracts started for single-family homes this week. That’s 3% more than last week and 7% more than a year ago.
There are still 8% fewer sales happening each week than in 2022. At that time two years ago, there were frantic last-minute deals getting done as mortgage rates were rising quickly. So, even though rates were up back then, sales were still strong.
But the hectic pandemic-era pace of sales had slowed, so inventory was building quickly. In 2022, the new sales rates really cratered after the Fourth of July holiday.
There are now 385,000 single-family homes under contract. That’s 5% growth compared to this time last year but is still 14% less than two years ago. New sales started this week saw 7% growth while the total number of homes under contract saw 5% growth.
It takes 30 to 40 days for the typical sale to close. The homes under contract now will mostly close in April and May. The 5% annualized growth rate is less than we’d hoped for at the start of the year, but it’s creeping up even with higher mortgage rates.
Altos Research uses direct measurement rather than seasonally adjusting its numbers. There are 385,000 single-family homes in escrow to complete a sale as of today. If you were to approximate a seasonal adjustment on this number, you would see a yearly sales pace of about 4.4 million units for April 2024. That pace is up from April 2023, but it is still running slower than the typical April. The seasonal pace is where one can observe the slowdown due higher mortgage rates.
The takeaway from the weekly new pending sales data is that even though sales continue to outpace last year, that growth has definitely slowed.
Home prices
The median price of single-family homes under contract is now $398,000. That jumped by 2.4% jump this week and is, in fact, a new all-time-high, surpassing the sale prices of two years ago.
These spring weeks are indeed the time when home prices climb, so it’s not too surprising that this trend is occurring now. But we’ve also been keeping a close eye on home prices in the face of these rising mortgage rates.
The prices of the homes going under contract are 6% more expensive than one year ago. Last year at this time, home prices were lower than in April 2022. But we’re now back at all-time highs. The previous peak was $395,000 two years ago.
One thing of interest in the price data is how slow this climb has been. Compared to Jan. 1, 2024, prices are up 6.6%. In most years, the increase is closer to 10% by this time in April. So, as a leading indicator for how the year ends up, this price signal is much softer than usual.
We can also see this in asking prices. The median price for all homes currently on the market is $449,000. That’s up a fraction from last week and only 1% above last year at this time.
Asking prices can be thought of as a leading indicator for future sales prices. Homes that are on the market now will get offers in May, close in June and will be reported on in July. So, the future signals for home prices aren’t falling because of higher mortgage rates, but it certainly looks like price appreciation has slowed.
Price reductions
Another strong leading indicator for future home sale prices is the share of homes on the market with price reductions. If more sellers have to cut their prices now, that’s a real signal for sales that will happen in the future.
Surprisingly, given the mortgage rate changes, there is no jump yet in the share of price reductions. We’ve been watching this stat closely.
This week, 32% of the homes on the market have taken a price cut. That’s actually down a fraction from last week, given a relatively strong set of new listings that hit the market and the fact that home sales are at their highest point of the year. Fresh inventory doesn’t take a price cut until after it sits for a while without an offer.
There are 3% more homes with price reductions today than a year ago. Last year at this time, price cuts were still decreasing with very tight volumes of new listings. There are more homes on the market now with price cuts than in any April on record. That shows weakness in prices, but it’s not a super high number and it’s not skyrocketing, so that implies we won’t see prices tanking anytime soon.
The takeaway here is that with the 30-year fixed mortgage at 7.4%, there is still just enough sales volume to keep home prices from dropping like they did in late 2022. The current market is not changing nearly that quickly. We’ll continue to watch data on price cuts. As mortgage rates make homes less affordable, fewer offers will be made and some sellers will cut their prices. That could accelerate in the next few weeks.
“So all the new permits that are getting [approved], all the new lands that are getting bought now – we’re not going to see anything until 2026-27 at this point,” he said. “So we need five, six years of that market.” US mortgage rates last week topped 7% for the first time in a month, … [Read more…]
The Federal Housing Finance Agency (FHFA) this week announced a new product proposal for government-sponsored enterprise (GSE) Freddie Mac that would allow the agency to purchase certain single-family, closed-end second mortgages.
This would offer borrowers an alternative way to access their home equity without surrendering a first mortgage with a more favorable interest rate than is currently available.
The proposal, published in the Federal Register, recognizes that existing borrowers “face limited options” if they seek to access equity on their primary residence, particularly if they have a mortgage rate from a loan originated during the low-rate environment of the COVID-19 pandemic.
“[A] traditional cash-out refinance today may pose a significant financial burden, as it requires a refinancing of the entire outstanding loan balance at a new, and likely much higher, interest rate,” FHFA said in its proposal. “Homeowners may also use second mortgages to access the equity in their homes, [where] only the smaller, second mortgage would be subject to the current market rate, as the original terms of the first mortgage would remain intact.”
Second mortgages are also typically offered at a lower interest rate than certain alternative products like personal loans, so Freddie Mac’s proposal is to purchase “certain closed-end second mortgage loans from primary market lenders” that are already approved to sell mortgages to Freddie Mac, the proposal states.
“In a closed-end second mortgage loan, the borrower’s funds are fully disbursed when the loan closes, the borrower repays over a set time schedule, and the mortgage is recorded in a junior lien position in the land records,” FHFA stated. “Freddie Mac has indicated that the primary goal of this proposed new product is to provide borrowers a lower cost alternative to a cash-out refinance in higher interest rate environments.”
FHFA Director Sandra Thompson explained that such options are needed in the current mortgage rate environment.
“The proposed activity is intended to provide homeowners with a cost-effective alternative for accessing the equity in their homes,” Thompson said in an announcement of the proposal. “Reviewing and considering comments from the public will be a critical component of our review as the agency exercises its statutory responsibility to evaluate new enterprise products.”
This is specifically designed to benefit consumers during the high rate environment, the agency said.
“In the current mortgage interest rate environment, a closed-end second mortgage may provide a more affordable option to homeowners than obtaining a new cash-out refinance or leveraging other consumer debt products,” the proposal explained. “A significant portion of borrowers have low interest rate first mortgages, and the proposal would allow those homeowners to retain this beneficial interest rate on the first mortgage and avoid resetting to a higher rate through a cash-out refinance.”
The Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act (HERA) of 2008, requires the GSEs to provide advance notice to FHFA of any potential actions or products they aim to pursue. This notice demonstrates that FHFA is fulfilling its mandate and seeks public comments on the proposal.
The comment period lasts 30 days from the publication of the proposal in the Federal Register, making May 16, 2024, the end of the comment period. Interested parties can submit comments to the agency on its website or via email.
As we approach the mid-2020s, the question on many homeowners’ and potential buyers’ minds is: what will mortgage rates look like in 2025? It’s a crucial question, as even a small fluctuation in rates can significantly impact monthly payments and overall affordability.
Looking ahead, experts offer a range of predictions, reflecting the inherent uncertainty in economic forecasting. Factors such as inflation, economic growth, monetary policy, and global market conditions all play a role in shaping the future of mortgage rates.
A conservative estimate suggests that 30-year fixed mortgage rates could be in the range of 5.5% to 7% by 2025. This prediction takes into account potential economic growth, the Federal Reserve’s likely responses to changing conditions, and the broader real estate market’s status.
Other forecasts are slightly more optimistic, with projections of a gradual decrease in mortgage rates over the next 18 months. For instance, Fannie Mae anticipates rates might slide to 6.0%, Wells Fargo expects around 5.8%, and the Mortgage Bankers Association estimates rates could fall to 5.5% by the final quarter of 2025.
However, it’s important to note that these predictions come with a degree of uncertainty. The past few years have shown that unprecedented events, such as the pandemic and geopolitical tensions, can rapidly alter the economic landscape. As a result, forecasters often advise caution and suggest that these projections are best viewed as guidelines rather than guarantees.
The consensus among experts is that while rates are expected to peak soon due to high inflation and policy measures, they will likely remain above historical lows. This means that while we may not see the rock-bottom rates of the early 2020s, there is also little expectation of a return to the double-digit rates of the 1980s.
Will Mortgage Rates Decline in 2025?
According to recent analyses and expert predictions, there is a sense of cautious optimism about the potential for mortgage rates to trend downward in 2025. The Mortgage Bankers Association, for instance, has projected that 30-year mortgage rates could fall to around 5.6%. This forecast is based on current market trends and economic indicators, suggesting a silver lining for those hoping for more favorable borrowing conditions.
The current landscape of mortgage rates has been shaped by a variety of factors, including inflation, Federal Reserve policies, and global economic conditions. In the past, rates below 4% were considered competitive, with a historical low point of around 3.75% in 2020 serving as a benchmark for what constitutes a ‘good‘ rate. However, the economic turmoil and policy responses to the COVID-19 pandemic have led to fluctuations that defy simple predictions.
Looking ahead, the expectation of a downward trend is influenced by several factors. Economic recovery, inflation expectations, and the Federal Reserve’s monetary policy are all expected to play a role in shaping mortgage rates in the coming years. The Federal Reserve, in particular, is anticipated to continue its delicate balancing act, adjusting interest rates to maintain economic stability while fostering growth.
It’s important to note, however, that these predictions are not guaranteed. The financial landscape is complex and subject to change due to unforeseen global events and policy shifts. Therefore, while the projections provide a general direction, individuals should remain vigilant and consult with financial advisors to understand how these trends may affect their personal circumstances.
In summary, while there is hope for a decrease in mortgage rates by 2025, it is crucial for potential borrowers to stay informed and prepared for any outcome. By keeping an eye on economic developments and seeking professional advice, one can navigate the mortgage market with greater confidence and make decisions that align with their financial goals.
CHARLOTTE — Inflation continues to overwhelm many families in the Carolinas, keeping the cost high for things like borrowing money to buy a home, and while you might think that would mean a drop in home prices, realtors in the Charlotte area say they’re seeing the exact opposite.
In Charlotte’s hot housing market, prices haven’t really gone down. Channel 9′s Evan Donovan spoke with realtors who say it’s not like the COVID-19 pandemic, but they’re having to get creative with their buyers.
“She sent me tons of properties, locations, we went to visit them but then I just said let’s build a home,” said Ebony Covington.
She got in the market to buy a home in January, but even with the help of her realtor, she couldn’t find the right fit in an existing home.
“We went to the design center, I was able to pick out exactly what I wanted in my home, inside and outside. It was a celebration every step of the way, and I probably asked a million questions,” Covington told Donovan.
But realtor Bre Gaither says it’s still a seller’s market. The Charlotte are has less than two months of inventory, but a balanced market is around six months of inventory. Gaither says the market is almost as hot as it was during the pandemic.
“We are still seeing multiple offers, we are still seeing bidding wars,” Gaither said. “Homes are being on the market and off the market in less than 24 hours. It’s not as crazy as the $50-60,000 over asking, but I’ve seen $15 to 20 thousand, for sure.”
A report from Rocket Mortgage in March showed the average home price in Charlotte is up nearly $15,000 over last year. In surrounding areas like Matthews, Pineville, and Huntersville, it’s even higher.
Covington says she’s happy to finally own a home that’s exactly how she wanted it.
“The outside is going to be blue. Since [we’re the] first house on the cul-de-sac, we get to choose and no one else can have that home color,” Covington said.
Moving into a new home in 2024 costs a lot more than in the past. According to data from Redfin, the average monthly housing payment just hit an all-time high of more than $2,700. The average 30-year fixed mortgage rate as of Thursday is about 6.8%, more than double the rate before the pandemic.
(WATCH: City of Charlotte unveils potential affordable housing developments)
City of Charlotte unveils potential affordable housing developments
If you’re on the hunt for the right pattern to decorate the walls of your home, look no further than Just Wallpaper in Brookfield.
The wallpaper store’s new location at 9219 Broadway Ave. opened to customers Tuesday. Co-owners Julia Hamilton and Kate Sanderson staff the stop themselves Tuesdays through Saturdays, helping customers who walk in or book appointments browse through the thousands of patterns the store has available to personalize their homes and make their spaces feel lived in.
“Don’t decorate your house gray and white for the future owner. Why are you doing that?” Hamilton said. “You live there. Decorate it for you!”
Berwyn Shops, an incubator program for small businesses in Berwyn’s Roosevelt Road corridor, and realized how much demand there was for a walk-in wallpaper store.
“A week into getting our LLC, the person from the [Berwyn Development Corporation] was like, ‘Oh, hey, do you want to get involved in this?’ And the next thing you know, we donated wallpaper to all 12 of the shops, and we have a park bench with our logo on it,” Hamilton said. “Then, people were like, ‘Well, we want to come check the books.’”
While Hamilton said she hadn’t envisioned Just Wallpaper having a storefront, she and Sanderson converted a “little, tiny, tiny office space” in Berwyn — the entire building was smaller than the front room of the store’s current space, Hamilton said — into a shop in June 2022 so they could host customers. In January 2023, they had expanded the store’s hours, accepting walk-in customers two days a week. By September 2023, they were open four days a week for walk-ins.
“Most of what we found is that people were coming into the little shop, and they [were] like, ‘Oh my God, thank God I found you. I’ve been on the internet for three months, I’ve spent $100 on samples, and I still haven’t found the [right] wallpaper. Help me!’” Hamilton said. “That’s where it became, like, ‘OK, this is a shop, and we’ve got to find a real store, and this is real.’ We’re solving a little problem, but we’re solving it.”
When it came time for Just Wallpaper to find a new location, Hamilton said the business’s current space felt right as soon as she saw it. She said Brookfield, too, made sense for Just Wallpaper’s new home due to its proximity to Chicago and its central location among the western suburbs.
“One of the things we learned rather quickly is that our clients that were in the city had no problem coming to Berwyn or Brookfield,” Hamilton said. “It’s not that far. It’s no big deal.”
Since the original Just Wallpaper was in Orland Park, “We have a lot of south suburb clients and people that are willing to drive, and they’re not willing to drive into the city,” she said. “We knew our general client is, you know, from Oak Park to LaGrange … We didn’t want to venture far, and Brookfield ended up being the most perfect.”
Hamilton said wallpaper has had a “really big surge” in popularity since the COVID-19 pandemic.
“We’ve seen it in real estate, but in interior design, [there’s a trend of] just making your space more your own, making it more lived in, making it more personal, and wallpaper’s just like a really easy way to do that,” she said. “It can be a luxury product based on price point, but just like anything else, it can also have a core-basics price point as well.”
While Just Wallpaper is just starting out at its Brookfield location, Hamilton said she and Sanderson have their eyes on the future.
“Not on the immediate horizon, but long-term horizon, I would love — you know, assuming we are thriving in the space, and wallpaper is trending in the way it has been — I would love to open more locations and have it be a retailer for wallpaper,” Hamilton said. “That’s the big dream.”