Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Many Americans expect mortgage rates to decline over the coming months but they remain pessimistic about how affordable buying a home will be in 2024, a survey by Fannie Mae shows.
The Fannie Mae Home Purchase Sentiment Index jumped by 3.5 points last month to nearly 71, its highest level since March 2022. This increased confidence was built on people feeling more secure in their jobs and those who believe the cost of a home is likely to decline this year, the index showed.
But the survey also revealed a fault line that is currently shaping the housing market— despite rates falling from their two-decade highs in the fall of last year, affordability still remains a concern for potential buyers. The Fannie Mae survey showed that a mere 17 percent of respondents said that now is a good time to purchase a property.
An all-time survey-high 36 percent of respondents indicated that they expect mortgage rates to go down in the next 12 months, while 28 percent expected them to go up, and 35 percent expected rates to remain the same.
“For the first time in our National Housing Survey’s history, a greater share of consumers believe mortgage rates will decrease over the next year, rather than increase,” Doug Duncan, Fannie Mae’s chief economist, said in a note. “Consumers also expressed greater confidence in their job situations this month, another sign that housing sentiment may continue to improve in 2024.”
But those consumers were also worried about whether they will be able to buy even as mortgage rates drop.
“While home affordability may improve if actual mortgage rates continue moving downward, other parts of the affordability equation have yet to ease or improve for consumers,” Duncan said. “A large majority still think home prices will either increase or stay the same; the ‘good time to buy’ component continues to hover near its historical low.”
Mortgage rates hit 8 percent in October 2023, making securing a home loan the most expensive it has been since the turn of the century. Since then, rates have declined to the mid-6 percent range, a development that has sparked some activity among buyers.
This jump in interest has yet to translate into a selling spree, partly due to elevated prices.
On Thursday, the National Association of Realtors (NAR) pointed out that the median single-family used home price jumped 3.5 percent from a year ago to $391,700. Meanwhile, the payments that American households would pay on their mortgages if they put down 20 percent of a loan was 10 percent higher than a year ago at about $2,200.
“Many homebuyers have been shocked at high housing costs, with a typical monthly mortgage payment rising from $1,000 three years ago to more than $2,000 last year,” Lawrence Yun, NAR’s chief economist, said in a statement shared with Newsweek.
The rise in prices is partly due to a lack of enough supply of homes available for sale. This was a particular challenge in the used homes market, where sellers who own mortgages in the 2 to 3 percent range are reluctant to give them up with current costs of home loans high.
“While a lower mortgage rate path supports our forecast for a gradual increase in housing demand and sales activity in 2024, until we see a meaningful increase in housing supply, we expect affordability will remain a significant barrier to home ownership for many households,” Duncan said.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Source: newsweek.com
The Nashville housing market has been a hot topic of discussion in recent years. As the city continues to thrive and attract new residents, buyers and renters need to understand the current state of the housing market and rental market in Nashville.
In this article, we will delve into the key factors shaping the Nashville housing market in 2024, including supply and demand, home prices, rental market dynamics and future projections. Grab your cowboy boots and your trusty six-string because we’re exploring Nashville in all its glory.
Known to many as Music City, Nashville has experienced significant growth in recent years. With a healthy economy, a legendary music scene and a desirable quality of life, it’s no wonder that people are flocking to this city in search of new opportunities. However, this rapid population growth has put immense pressure on Nashville’s housing and rental market.
One of the primary drivers of the housing market in Nashville is the city’s population growth. According to the latest data, Nashville has experienced a population increase of over 10% in the past five years. This surge in population has created a high demand for housing, leading to increased competition and rising prices.
While the demand for housing in Nashville continues to rise, the supply has struggled to keep pace. This supply-demand imbalance has resulted in skyrocketing home prices and limited housing options for buyers. As a result, affordability has become a significant concern for many residents, especially first-time homebuyers.
The housing market for homes in Nashville has seen a consistent upward trend in prices over the past few years. This rise in prices can be attributed to a number of factors, including limited inventory, strong demand and other economic conditions. Let’s take a closer look at the pricing trends in different segments of the Nashville housing market.
Single-family homes have experienced substantial price appreciation in Nashville. The median home price in the city has decreased by 6.1% over the past year, reaching an all-time high of $465,000. This price surge can be attributed to the high demand for single-family homes and the limited inventory availability.
The condominium and townhouse market in Nashville has also witnessed significant price growth. With a median price increase of 36.4% in the past year, these properties have become increasingly popular among buyers looking for a more affordable option in the city. However, even with the price appreciation, condos and townhouses still offer a more affordable entry point into the Nashville housing market than single-family homes.
In addition to the buying market, the rental market in Nashville is also experiencing its fair share of challenges and opportunities. Let’s explore the key dynamics shaping the rental market in the city.
Similar to the real estate market, the rental market in Nashville is characterized by high demand and low vacancy rates. With an influx of new residents and a limited supply of rental units, competition among renters has intensified. As a result, rental prices have been on the rise, making it increasingly challenging for tenants to find affordable options.
As the demand for rentals continues to grow, developers have been focusing on luxury rental properties with upscale amenities. These high-end rentals cater to professionals and individuals looking for a premium living experience in Nashville. From rooftop pools to fitness centers and concierge services, these luxury rentals offer a wide range of amenities to attract tenants.
Looking ahead, what can we expect for the future of the Nashville housing market? While it’s challenging to make precise predictions, several factors may influence the market in the coming years.
Nashville’s population is projected to continue growing in the foreseeable future. As more people are drawn to the city’s strong culture and fruitful job market, the demand for housing will likely remain high. This sustained population growth will put further pressure on the housing market, potentially leading to even higher prices and increased competition.
To accommodate the growing population, Nashville has been investing in public infrastructure and large-scale development projects. These initiatives aim to improve transportation, expand housing options and enhance the overall quality of life in the city for all residents.
The Nashville housing market is experiencing significant challenges and opportunities in 2024. With a rapidly growing population and limited housing supply, the market is characterized by high demand, rising prices and affordability concerns. Buyers and renters face intense competition, making it crucial to stay informed and prepared. As the city continues to evolve, it will be fascinating to see how the Nashville housing market adapts and thrives in the years to come.
When you’re ready to stake your claim in the Nashville market, you know where to start your search for a Nashville apartment or house.
Source: rent.com
Housing demand is up and it’s time to track the spring housing data and see what the selling season will bring. As I always stress, we are working from the lowest bar ever with demand, so let’s add historical context to the data. But, even with mortgage rates higher this year than last year, demand is rising.
As we get closer to the end of the first month of 2024, forward-looking purchase application data looks good. Once I make some holiday adjustments, we have eight weeks of a positive trend since mortgage rates fell from the 8% high, and as of now, the slightly higher rates we’ve seen recently haven’t impacted the data just yet. Historically, higher rates negatively impact the weekly purchase application data, and I will look for this over the next few weeks . But it’s very early in the seasonal demand timeframe for housing, so we will take it one week at a time. Purchase apps were up 8% week to week and still down 18% year over year. Last year at this time we got a boost in demand with rates heading toward 6%.
Here is a look at last week:
Last week, we saw active inventory fall slightly week to week. This is common in January. We have had some positive purchase application data recently, and the pending home sales report came in as a beat last week. So, inventory falling looks normal. However, I would like to see the inventory bottom very soon and have a more traditional seasonal increase, rather than having a bottom in March or April.
One of the more positive stories about housing inventory recently is that we found a bottom in new listings data last year, and we have been starting to grow new listings data for some time now on a year-over-year basis. It isn’t anything significant, but I will take it after what we have been through the last few years. This is something I talked about on CNBC recently.
Weekly new listing data:
Every year, one-third of all homes take a price cut before selling — nothing abnormal about that. However, this data line accelerates higher when mortgage rates rise, and demand gets hit harder. A perfect example was in 2022: when housing inventory rose faster, the percentage of price cuts rose faster as home sales crashed. That increase matched the slope of the inventory increase, and people needed to cut prices to sell their homes.
Toward the end of 2022, that marketplace changed as home sales stopped crashing and the market stabilized. So far this year, the price cut percentage data is still on pace to break below the lows we saw in 2023 in the spring. This data line is very seasonal, so what is occurring now is very normal.
This is the price-cut percentage for the same week over the last few years:
The 10-year yield is the key for housing in 2024. In my 2024 forecast, I have the 10-year yield range between 3.21%-4.25%, with a critical line in the sand at 3.37%. If the economic data stays firm, we shouldn’t break below 3.21%, but if the labor data gets weaker, that line in the sand — which I call the Gandalf line, as in “you shall not pass” — will be tested.
This 10-year yield range means mortgage rates between 5.75%-7.25%, but this assumes spreads are still bad. The spreads have been improving this year so much that if we hit 4.25% on the 10-year yield, we won’t see 7.25% in mortgage rates.
Last week, we got great news on inflation data, and we have been saying the inflation growth rate has slowed. However, in the economic game of rock-paper-scissors, it’s labor over inflation data, and the jobless claims data are too low, so the Fed hasn’t pivoted yet. Monday’s podcast will go over this topic more clearly.
The 10-year yield started last week at 4.14% and ended the week there. Mortgage rates ranged between 6.875% and 6.95%, ending the week at 6.90%. There is not much movement with the 10-year yield and mortgage rates. It’s wild to think that three to six month PCE inflation data is running below 2%, and mortgage rates are still this high. Remember, the Fed hasn’t pivoted and is still very restrictive.
It’s jobs week! So we will get the four labor reports: Job openings, ADP, jobless claims and the BLS jobs report. The Federal Reserve meets this week: we won’t see a rate cut this time but the key is the language they use in this meeting after the recent inflation data we saw. Also, the question and answers should be very interesting. We also have some home price data, which of course is a bit lagging from what is happening currently, but we will get those reports as well.
Source: housingwire.com
As global central banks raised interest rates to tame inflation,
home prices have cooled relative to the start of the hiking cycle. However, despite the
sensitivity of the residential market to higher policy rates, prices are
still above historical averages. Home prices in advanced economies,
including most European Union countries, as well as Africa and the Middle
East are 10 percent to 25 percent higher than pre-pandemic levels.
Rising interest rates have passed swiftly to residential mortgage markets,
impeding affordability for current and prospective home buyers.
Additionally, scarce home supply is limiting purchases in some regions. In
all, housing affordability is more stretched amid still-elevated home
prices and higher interest rates.
In the first half of 2023, mortgage rates in advanced economies climbed by
more than 2 percentage points compared to the previous year. During this
period, countries like Australia, Canada and New Zealand witnessed
substantial declines in real house prices, likely due to a high share of
adjustable-rate mortgages and home prices that have been stretched since
before the pandemic. Comparatively, home prices have fallen more than 15
percent in some advanced economies while the drop in emerging economies was
less significant. But, on net, real house prices will need to keep cooling
from the 2021 and 2022 highs to reach pre-pandemic levels.
Higher borrowing costs are likely to see the largest impact on household
debt service ratios—a measure of borrowers’ loan repayment ability—in
countries where housing markets remain overvalued and average lifespans for
mortgage loans are shorter, according to our latest
Global Financial Stability Report.
Approvals and repayment
For instance, for some advanced economies such as Norway, Sweden, Denmark,
and the Netherlands with pre-existing double-digit households’
debt service ratios, borrowers’ debt servicing costs could increase by up to 1.8 percentage
points given the surge in interest rates. That would have consequences for
loan approvals and borrower repayment capabilities. But borrowers are also
less indebted, and underwriting standards have been strengthened since the
global financial crisis, tempering the risk of a surge in loan defaults.
This may have also limited instances of forced selling or foreclosures of
homes, helping to support home prices.
In the United States, the Federal Reserve’s interest rate hikes brought big
changes to the mortgage loan market, with the average rate on a 30-year
fixed mortgage recently reaching a two-decade high of 7.8 percent. For
prospective buyers, entry costs are putting homeownership further out of
reach as the required down payments have also become a prohibitive factor
because savings have shrunk since the pandemic.
Existing homeowners, deterred from purchasing new properties due to larger
monthly mortgage payments, stay put causing a reduction in supply of
existing homes. This phenomenon, known as “lock-in” effect, is particularly
evident in the United States, where long-tenured fixed-rate mortgages are
most popular. With average 30-year mortgage rates currently at 6.6 percent,
around 3 percentage points above pandemic lows, mortgage originations
remain 18 percent below last year’s levels while refinancing applications
increased 8.5 percent over the year as mortgage rates continued to ease.
Rates and refinancing
The 30-year fixed-rate mortgages accounted for 90 percent of new US home
loans at the end of last year, according to ICE Mortgage Technology. Almost
two-fifths of all US mortgages were originated in 2020 or 2021, ICE data show,
as the low interest rates during the pandemic allowed many Americans to
refinance their home loans.
Higher interest rates also raise rental costs. Many people prefer to rent
instead of buying given median house prices have been slow to adjust. In
this context, the combination of higher rates and still-scarce housing
supply creates a vicious circle that complicates central banks’ fight
against inflation. US monthly home prices continued to rise in October
compared with a year ago, with shelter contributing to one-third of the
change of consumer prices in November.
If the Fed starts rate cuts this year, as policymakers and market
participants project,
mortgage rates will continue to adjust, and pent-up housing demand could be
unleashed. A sudden increase, as the result of rapid rate cuts, could
offset any improvements in housing supply, causing prices to rebound.
Source: imf.org
The 2023 housing market faced one of the same roadblocks we saw in 2022: mortgage rates were too high for home sales growth. Now that we’re in 2024, the Federal Reserve‘s rate hike cycle is over, so let’s look at what that means for housing demand and home prices. However, a yearly forecast has limitations and in this crazy housing and economic cycle, if people give you a yearly forecast without guidance as variables change, you’ll be dealing with stale data. Every Saturday I publish a weekly housing market tracker with forward-looking data and insights so you can adjust quickly to market conditions.
Here’s my forecast for 2024:
For 2024, the 10-year yield range will be similar to 2023, but with a few different variables to watch.
A key level to watch for the 10-year yield is 3.37%. To go below this level last year, labor would need to break, so I borrowed Gandalf the Grey’s catchphrase: “You shall not pass.” And the 10-year yield did not pass that level in 2023!
However, if the labor or economic data gets weaker, we can break through that Gandalf line, which means 2.72% on the 10-year yield is in play for 2024. This could mean sub-5% mortgage rates if the spreads get better — a win for the housing market.. If the spreads are still bad, mortgage rates will be between 5%-6%. If the 10-year yield gets above 4.25%, the U.S. economy has outperformed again, as it did in Q3 when it grew at 5% and jobless claims fell.
Here is a chart of the 10-year yield with the inflation growth rate data tied to it for 2023:
Now let’s talk about mortgage rates!
The spread between the 10-year yield and mortgage rates can get better in 2024, which means mortgage rates could be 0.625% to 1% lower next year. For example, mortgage rates would be under 6% today if the spreads were normal. Instead, they closed 2023 at 6.67%. If the spreads get anywhere back to normal and the 10-year yield gets to the lower end of the range in 2024, we can have sub-5 % mortgage rates in 2024.
With the Fed no longer in hiking mode, any economic weakness on the labor side is a better backdrop to send mortgage rates lower. Unlike 2023, this year there are more positive variables that could send mortgage rates lower rather than higher.
If everything stays constant, 2024 home-price growth levels will repeat what happened in 2023: low single-digit national home-price gains.
What could make home prices grow faster than low single digits? If I am wrong and mortgage rates go lower for longer and we don’t get more new listings in 2024, then home prices can grow faster in 2024 because we will have the same issue as before: too many people chasing too few homes.
What could make home prices decline? This would happen if we saw a surge of stressed inventory and mortgage rates didn’t go low enough to handle that much new supply into the market. We had mortgage rates in a solid range between 3.75% and 4.75% for most of the previous decade, but that hasn’t been the case recently. So, this is something to consider only if we see an increase in stressed inventory.
To give an example of what I am talking about, from 2008 to 2011, new listings data ran between 250,000 and 400,000 each week, with the peak seasonal data at 370,000 and 400,000. We haven’t had new listings data break over 90,000 in the peak seasons of 2021, 2022 or 2023. So if we do see a push in stressed new listings we have to be on it right away and see how the supply and demand equilibrium works.
However, we won’t have this conversation until we see it in the weekly data. In this episode of the HousingWire Daily podcast I explain how fast the housing dynamics shifted after Nov. 9, 2022, with prices returning to all-time highs in months. This is why weekly data is important!
When we saw mortgage rates fall from 7.375% to 5.99% early in 2023, we got one of the most significant existing home sales prints ever, going from 4 million to 4.55 million. We need lower rates to get more consistent sales growth and to have one or two monthly existing home sales prints of 4.72 million or more, it’s going to take sub-6% mortgage rates with duration.
We will track the purchase application data weekly, however, I am only focused on that 4.72 million monthly print number for 2024 because the lack of affordability with rates still this high is impacting sales.
As long as mortgage rates go lower, the builders can sell homes because they can lower mortgage rates even more than the existing home sales market and they have a pipeline of homes to sell. They have 106,000 homes that they haven’t even started construction on yet, and only 78,000 new homes have been completed and are ready to sell. They will manage their supply slowly.
Looking at the economic cycle and the housing economy, we have a similar playbook going into 2024 as we did in 2023. Let’s look at that dynamic.
I raised the final flag in my six recession red flag model on Aug. 5, 2022. However, by Nov. 9, 2022, I saw that housing market dynamics had shifted and if I was right, the builders were about to get more positive about their business. Sure enough, the builders confidence survey started to grow again going into 2023.
As mortgage rates started rising toward 8%, the builders survey started to go lower, mostly due to smaller builders feeling the pinch. Now that rates have fallen again, this is a positive for the single-family housing market. The new home sales market means more to the economy because of construction jobs and big-ticket item purchases. In contrast, the existing home sales market is more about the transfer of commission and moving trucks.
People correctly keep an eye on the builder’s survey. However, the builder survey and new home sales rebounded to growth in 2023, and now, with rates almost down 1.5% for 2024, lower rates will help the builder survey again.
This is only for the single-family housing market, not the apartment market, which is heading into a decline in activity. This is something to watch on labor, as certain builders will not need as many people to build apartments. When rates stay too high for too long, you eventually impact future production.
We will only start talking about a recession when jobless claims break over 323,000 on the four-week moving average. We won’t talk about a recession today, or next year or even this decade until that happens. The history of economics has shown us that we need the labor market to break to have a job-loss recession. If you followed my work during COVID-19, you know my critical two takes about the labor market and how household balance sheets are much better now than ever. When jobless claims break that critical level, we will have a good discussion about the economy and the housing market, just not yet.
If the economy doesn’t have a credit event where lending gets tighter, the consumer should hold up in 2024, especially with lower mortgage rates. This means the homebuilders can sell more homes and keep construction workers employed longer. Falling construction employment is a staple of all job-loss recessions, and we have avoided that so far.
For 2024, I want to stress that the economic data can turn on a dime — both positive and negative — in ways that weren’t the case in the previous decade. Following the weekly tracker will be essential for the housing market and the economy. I track this stuff daily so you don’t have to!
The existing home sales market has spent the last 18 months with sales near great recession levels. Now it’s time for the Fed to give up on its covid-era housing economic policy and be pro-housing once again. It’s time to get U.S. housing off the COVID-19 policy and get sales growing.
Source: housingwire.com
Mortgage interest rates continued their decline this week and have hit the lowest level in six months since May of 2023. Mortgage interest rates are now at an average of 6.61%, easing from 6.67% last week. The typical monthly mortgage payment for a $400,000 home is now at $2,046. While NAR’s Pending Home Sales shows flat data from October to November, the recent week’s rate decline should motivate buyers who had been priced out of the market.
There are many signs of encouragement heading into 2024 in the housing market, such as more housing inventory from home builders, lower mortgage interest rates, and demographics. This year, even the youngest baby boomer (born between 1946 and 1964) turned 60 years of age. Baby boomers are the largest share of home buyers and may be looking for their retirement property. Last year, half of older boomers paid all cash for their homes and are less concerned with mortgage interest rates. Additionally, millennials (the largest adult generation) may be looking for their first property or a move-up family home. Housing demand is apparent. With added inventory and better mortgage interest rates, 2024 looks like a better year.
Source: nar.realtor
Mortgage rates declined significantly over the past week, marking the eighth straight week of falling interest rates.
The 30-year fixed mortgage rate is 6.61% for the week ending December 28, 2023, according to data from Freddie Mac. This represents a decrease of -0.06% from a week ago.
The 15-year fixed rate mortgage stands at 5.93%. That’s 0.02% lower than a week prior. At that rate, you’ll pay $840 per month in principal and interest for every $100,000 you borrow.
The rate you’ll actually receive will vary based on the price of the home you’re buying, your credit history, and the size of the down payment you’re making. You can compare the offers below to find your best rate.
High interest rates are sticking around as central banks around the world, including the Fed, battle stubbornly high inflation with a series of aggressive interest rate hikes. These efforts to rein in prices have also slowed global economic growth and fueled recession fears.
Geopolitical tensions stemming from the ongoing war in Ukraine and conflict in the Middle East have further clouded the economic outlook.
As the Fed asserts that more rate hikes are likely needed to tame inflation, analysts expect mortgage rates will continue trending upward in the near term. This could place even more affordability pressure on the housing market, especially impacting first-time homebuyers.
Getting the lowest mortgage rate possible can save you tens of thousands of dollars over the lifetime of your home loan. With rates on the rise in 2023, it’s more important than ever to understand the factors impacting mortgage rates, strategically shop for the best deal, and meet lenders’ requirements to qualify for the lowest rate.
This guide will cover everything you need to know about today’s mortgage rates, from how they’re determined to where experts expect them to go in the months ahead.
Mortgage rates tend to follow the direction of long-term government bond yields, especially the yield on 10-year Treasury notes. Here are some of the key factors that can influence fluctuations in these yields and mortgage rates:
When shopping for a home loan, following these tips can help ensure you lock in the lowest possible mortgage rate:
Mortgage lenders weigh many factors when reviewing applications, but most have basic requirements borrowers must meet to qualify for certain loans. Here are typical minimum standards for popular mortgage types.
Mortgage rates have seen significant fluctuations over the past few years:
The chart below shows average rates for the 30-year and 15-year fixed rate mortgages over the past three years.
The takeaway is that mortgage rates shift constantly in response to economic or political factors. Staying informed and timing your purchase to lock in a lower rate can make a huge difference in how much home you can afford. Casting a wide net when shopping for lenders pretty much guarantees you’ll secure the most competitive rate on your loan.
Mortgage rate data comes from Freddie Mac, a government-sponsored leader in the housing industry that tracks average mortgage rates. We considered average rates for both the 30-year fixed rate mortgage and 15-year fixed rate mortgage. Freddie Mac rates exclude additional fees and points.
Average rates are reported weekly on Thursdays and updated accordingly.
This article is not intended to be financial advice. Before making significant financial decisions, you can review your options with a financial advisor or credit counselor.
Source: qz.com
The cost of living in Minneapolis is on the rise, but it’s still affordable given the big city amenities it offers residents. More than 420,000 people call this Midwest city home.
Right now, the average rent in Minneapolis for a one-bedroom apartment is 1.88 percent higher on average than in Chicago. While the cost of living is 5.1 percent above the national average, this is quickly changing as housing demand increases with newcomers.
Minneapolis’ housing market — whether you’re renting or buying — has remained relatively steady over the past year. The average rent in Minneapolis has gone up 0.2 percent to $1,444 per month for a one-bedroom in the past year. This average rent fluctuates dramatically per neighborhood and amenities offered.
Living in Cedar Isles – Dean and North Loop is among the most expensive. The average rent for a one-bedroom in Cedar Isles – Dean is $2,759 while living in North Loop is in the $1,800 a month range. Neighborhoods closer to the average range in Minneapolis include Corcoran, Loring Park and Lyn-Lake.
If you’re looking to stay within Minneapolis and save a little on rent, you can find an apartment in Como and Elwells for about $900 a month on average or South St. Paul for $851 per month.
The average home price in Minneapolis at this time is $325,000. However, this is mainly dependent on the neighborhood. As of April 2021, home prices are up 7.6 percent compared to last year, according to Redfin. Most homes sell in fewer than 12 days.
From its walleye to Scandinavian dishes, Minneapolis is known for everything from its comfort food and food trucks to fine dining restaurants.
Minneapolis’s cost of living for groceries is 2.6 percent above the national average. Expect to see eggs for $1.81, ground beef for $4.40 a pound and bread for $2.31.
Dining out at an inexpensive restaurant is about $16 a person while a pint of domestic beer is around $6, not including tip.
Minneapolis tends to have warm and wet summers while winters are freezing and windy with snowy days and nights.
Minneapolis’ utility prices are 2.8 percent below the national average. You can expect your total energy costs of around $160.63 each month.
For the internet, the city has a limited amount of providers, but your bill will hover around $61.97 a month.
The state of Minnesota’s electric and natural gas utilities offer some rebates and incentives for customers if homeowners or renters want to make their spaces more energy-efficient. The Weatherization Assistance Program (WAP) provides assistance for income-qualified households with free home energy upgrades for homeowners and renters.
Minneapolis ranks No. 77 as the most congested city in the United States. Drivers lose about nine hours a year and $133.71 sitting in traffic. The average commute is 27 minutes, according to a recent study. If you have to park, expect to spend $7.36 for a two-hour parking spot, on average.
Luckily, it’s easy to get around Minneapolis without a car. The city is in a grid layout and several buses crisscross the city. The Minneapolis METRO Light Rail offers 43 stops, including the Mall of America and terminals 1 and 2 of the MSP Airport. Buses offer even more coverage, with over 120 bus routes in the Twin Cities and surrounding area.
Its Nice Ride program is a fun, easy and affordable way to get around on two wheels. For just $2.50 a ride or $89 a year membership, more than 3,000 bikes or scooters are available at 400 stations.
Minneapolis‘ walk score is 75 but its bike score is a healthy 83 thanks to many neighborhoods with great paths and bike lanes. Its transit score is 57.
All in all, the cost of living for transportation in Minneapolis is right in line with the national average.
Abbott Northwestern Hospital is nationally ranked in two adult specialties. As a teaching hospital, it’s also rated high performing in six adult specialties and 10 procedures and conditions, according to U.S. News and World Report.
Minneapolis healthcare costs are 2.2 percent higher than the national average.
While it’s tough to share an average for overall healthcare since each person’s healthcare needs will be different, a regular doctor visit costs $147.85 on average while a prescription drug can set you back $437.87 on average (without insurance of some kind).
You can pick up ibuprofen at your local pharmacy for $11.90 on average.
Beyond essential bills, Minnesotans can expect to spend 11.2 percent above the national average on goods and services across different categories.
While many neighborhoods throughout Minneapolis are pet-friendly, expect to spend around $65.82 on average for vet services.
Enjoy practicing yoga? A pop-in yoga class is around $22.57, although you can save money by buying in bulk or becoming a member.
There are also plenty of exercise facilities throughout the city and some apartment buildings offer a fitness facility on their properties as an amenity.
The Minnesota state sales tax rate is currently 6.875 percent and depending on local municipalities, the total tax rate gets as high as 8.375 percent. In Minneapolis, the sales tax rate is 8.025 percent, broken down as follows: Minnesota State: 6.875 percent; Hennepin County: 0.150 percent; Minneapolis: 0.500 percent; Hennepin County Transit: 0.500 percent.
For example, a laptop computer on sale for $1,000 will cost 1080.25 with taxes.
Minnesota’s income tax is a graduated tax with four rates currently: 5.35 percent, 7.05 percent, 7.85 percent and 9.85 percent. Rates apply to income brackets — varying by filing status.
Most financial advisors recommend keeping your rent payment at 30 percent of your gross income or less. You would need to make at least $57,800 annually to afford a one-bedroom apartment in Minneapolis. Currently, a one-bedroom costs $1,445 per month on average.
For perspective, an average Minneapolis resident makes around $71,000 a year. Want to know where you stand with your current budget? Use our rent calculator to get a high view of how it would change after moving to Minneapolis.
Minneapolis residents enjoy living in an affordable city and having easy access to nature and the outdoors as well as great food, a vibrant indie music scene and big-city amenities.
If Minneapolis is calling your name, you can find great apartments for rent or homes to buy here today.
Source: rent.com
Mortgage interest rates are mixed over the past week, with the 30-year fixed rate declining for the seventh straight week and the 15-year fixed rate rising marginally.
The 30-year fixed mortgage rate is 6.95% for the week ending December 14, 2023, according to data from Freddie Mac. This represents a decrease of -0.08% from a week ago.
The 15-year fixed rate mortgage stands at 6.38%. That’s 0.09% higher than a week prior. At that rate, you’ll pay $865 per month in principal and interest for every $100,000 you borrow.
The rate you’ll actually receive will vary based on the price of the home you’re buying, your credit history, and the size of the down payment you’re making. You can compare the offers below to find your best rate.
High interest rates are sticking around as central banks around the world, including the Fed, battle stubbornly high inflation with a series of aggressive interest rate hikes. These efforts to rein in prices have also slowed global economic growth and fueled recession fears.
Geopolitical tensions stemming from the ongoing war in Ukraine and conflict in the Middle East have further clouded the economic outlook.
As the Fed asserts that more rate hikes are likely needed to tame inflation, analysts expect mortgage rates will continue trending upward in the near term. This could place even more affordability pressure on the housing market, especially impacting first-time homebuyers.
Getting the lowest mortgage rate possible can save you tens of thousands of dollars over the lifetime of your home loan. With rates on the rise in 2023, it’s more important than ever to understand the factors impacting mortgage rates, strategically shop for the best deal, and meet lenders’ requirements to qualify for the lowest rate.
This guide will cover everything you need to know about today’s mortgage rates, from how they’re determined to where experts expect them to go in the months ahead.
Mortgage rates tend to follow the direction of long-term government bond yields, especially the yield on 10-year Treasury notes. Here are some of the key factors that can influence fluctuations in these yields and mortgage rates:
When shopping for a home loan, following these tips can help ensure you lock in the lowest possible mortgage rate:
Mortgage lenders weigh many factors when reviewing applications, but most have basic requirements borrowers must meet to qualify for certain loans. Here are typical minimum standards for popular mortgage types.
Mortgage rates have seen significant fluctuations over the past few years:
The chart below shows average rates for the 30-year and 15-year fixed rate mortgages over the past three years.
The takeaway is that mortgage rates shift constantly in response to economic or political factors. Staying informed and timing your purchase to lock in a lower rate can make a huge difference in how much home you can afford. Casting a wide net when shopping for lenders pretty much guarantees you’ll secure the most competitive rate on your loan.
Mortgage rate data comes from Freddie Mac, a government-sponsored leader in the housing industry that tracks average mortgage rates. We considered average rates for both the 30-year fixed rate mortgage and 15-year fixed rate mortgage. Freddie Mac rates exclude additional fees and points.
Average rates are reported weekly on Thursdays and updated accordingly.
This article is not intended to be financial advice. Before making significant financial decisions, you can review your options with a financial advisor or credit counselor.
Source: qz.com
From high prices to low inventory, potential home buyers know it’s gnarly out there. But if you’re ready for homeownership, the long-term benefit of buying often outweighs the pain of toughing out the search — even these days.
Think of it like your 5 a.m. spin class: You know it’s good for you, even if it takes grit (and leaves you feeling sore).
With some market savvy, you can make the most of today’s challenging conditions. Here’s your game plan for buying a house in 2024.
Buyers have been at the mercy of mortgage rates’ meteoric rise, holding on as the average 30-year fixed rate climbed from 3% to nearly 7% in 2022. In October 2023, rates topped 8% for the first time since 2000 — a surprise even many top economists didn’t predict. But throughout November, they dropped slightly, landing at an average of 7.03% for the week ending Dec. 7.
Higher interest rates make it more expensive to get a mortgage. To put that in perspective: Let’s say you can afford $1,800 per month in principal and interest. At a 3% interest rate, you could afford to borrow $426,900. But at a 7% interest rate, you could afford to borrow only $270,600. Why? Because you’d pay a full $156,300 more in mortgage interest with the higher rate.
For now, economic signals suggest more positive news for buyers in 2024. Dan Moralez, regional vice president at Dart Bank in Holland, Michigan, points to a cooling economy and the pause on Fed interest rate hikes. “All of that stuff really lends itself to mortgage rates getting better and the cost to borrow getting cheaper,” Moralez says.
Let’s set realistic expectations, though: No experts are forecasting a return to 3% rates anytime soon. More likely, we’ll see the 30-year mortgage rate decline modestly below 7% in the second half of 2024, according to forecasts from the Mortgage Bankers Association and the National Association of Realtors.
Don’t let high rates keep you on the sidelines for too long. When rates go down, competition goes up — another reason there’s no time like the present to start house hunting.
And whichever way rates move in 2024, you’ll save money if you shop around. Aim to get an estimate from at least three mortgage lenders. The Consumer Financial Protection Bureau estimates borrowers can save $100 per month (or more) this way. And look at the annual percentage rate, or APR, to understand the total cost of the loan, which includes fees and other charges.
With buyers wincing at high rates, some lenders are advertising “buy now, refinance later” offers. Others are offering temporary buydowns, where the buyer’s effective monthly payment is reduced for a year (or a few). Before signing up for a discount, ask questions to understand how it works. Each option could potentially save money, but Moralez says it could also be “smoke and mirrors” if the flashy deal is offset by higher fees.
“It’s one of those things where I tell folks, ‘There’s no free lunch, OK?’” he says. “You know, somebody is paying for it somewhere.”
The rate of existing home sales is the lowest it’s been in 13 years, according to October 2023 data from the National Association of Realtors (NAR). The current market has a 3.6-month supply of unsold home inventory, meaning it would take listed homes 3.6 months to sell at the current sales pace. A balanced market has a supply of five to six months.
So why aren’t sellers selling? Octavius Smiley-Humphries, a real estate agent with The Smiley Group in Apex, North Carolina, points to higher prices and the “rate lock-in effect.”
“At this point, you’d be paying either double your mortgage for the same price house that you have, or a similar mortgage if you’re trying to even downsize,” he says. “So I think the more intelligent buyer is kind of thinking, ‘What’s the benefit?’ unless you absolutely have to move.”
Some hope: Single-family construction permits are on the rise, with more issued in October 2023 than at any other time in the past year, according to the Federal Reserve Bank of St. Louis, so we’ll see more new houses boosting supply soon. And despite larger shortages, 92% of markets have seen modest inventory growth over the last three months, according to a November 2023 report from ICE Mortgage Technology.
You can’t control who puts their house on the market. So focus on what you can change: your expectations.
Let go of the fantasy of finding the perfect home when a “good enough” home can get your foot in the door sooner. That’s especially true for first-time home buyers who are eager to build equity.
“Real estate has always been a really solid investment,” Smiley-Humphries says. “So what you essentially lose by waiting six months or a year could mean tens of thousands of dollars.”
For now, maybe you expand your search to include condos or townhouses. Maybe you settle for fewer bathrooms or a dated interior. Keep your chin up — even if you have to tolerate less square footage or weird linoleum floors for a while, you’ll have equity to remodel or sell in a few years.
Housing is the least affordable it’s been since 1984, according to a November 2023 report from ICE Mortgage Technology. Why? Home prices are growing faster than income, and on top of that, higher mortgage rates increase the cost of borrowing.
In October 2023, the median existing home sales price climbed to a record high of $391,800, according to the NAR. To buy a median-priced home at that time, buyers would need to shell out $2,567 per month just in principal in interest, ICE estimates. That’s another all-time high since ICE has been keeping track — and nearly double the median monthly payment of $1,327 just two years ago.
Until supply catches up to demand, prices are unlikely to fall. Realtor.com estimates prices will fall less than 2% next year. That’s another reason to jump in now: A big drop in prices could trigger more competition.
If you’re Zillow-stalking houses you can’t afford, stop. Instead, channel that energy toward your plan to shop for a house in real life — starting with setting a realistic budget.
First, talk to a financial advisor or use an online calculator to see how much house you can afford. Understand how mortgage lenders will determine your eligibility, including analyzing your credit score, cash savings and monthly debt payments.
Next, find a buyer’s agent who knows how far your budget can go in your local market. An experienced agent can advocate for you and help you snag a good deal.
One bargain-hunting tip: Start searching in the winter, suggests Ellie Kowalchik, a real estate agent who leads the Move2Team with Keller Williams Pinnacle Group in Cincinnati, Ohio.
“There are good houses on the market now that aren’t getting the attention they may get in the spring with more buyer activity,” she says. “Less competition is good for buyers.”
More than one in four homes are still selling for above list price, according to October 2023 data from the NAR: 28% of homes sold for above list price that month. Homes for sale spent a median of 23 days on the market and saw an average of 2.5 offers, a sign that competition remains tough.
“Limited housing inventory is significantly preventing housing demand from fully being satisfied,” Lawrence Yun, NAR chief economist, said in a press release. “Multiple offers, of course, yield only one winner, with the rest left to continue their search.”
In general, first-time buyers come to the negotiating table with less cash than repeat buyers, reports the NAR. First-time buyers make a median down payment of 8%, while repeat buyers put down a median 19%.
And nearly one in three (29%) of sales were made in cash, reports the NAR, up slightly from 26% in 2022.
A good real estate agent can help you craft a strong offer, even if other buyers flash more cash.
Aziz Alhees, a real estate agent with Compass in Pasadena, California, has seen his share of wealthy investors making cash offers. He notes that they tend to bid below asking price since cash sales close faster. The promise of a quick closing is enough to get some sellers to turn down higher offers that ask for more time.
So Alhees competes on speed: With a mortgage preapproval and all other paperwork in hand, he prepares his buyers to close in 14 days.
“We’re not afraid of cash offers anymore,” he says.
On the flip side, if the sellers need more time to move out, a flexible closing timeline can sweeten some deals, too. But don’t waive the home inspection when you’re negotiating. It can be tempting, but you’re only hurting yourself if you later discover expensive problems.
It’s fair to feel bummed out about high costs and low inventory. That’s especially true for first-time buyers who have been putting off their search, only to see the market remaining rough.
The solution: Think long term. Holding out for lower rates likely means you’ll face steeper prices and more competition. So if you’re determined to buy, find a place that suits your needs and budget as-is. Expecting perfection often means setting yourself up for disappointment.
“Sometimes I have clients that think they’re going to hit a home run the very first house they buy,” Moralez says. “And a lot of times I tell clients, well, sometimes it’s OK to be happy just getting on base.”
Source: nerdwallet.com