Lawrence Yun, the NAR’s chief economist, also flagged the looming presidential election as a potential reason for prospective homebuyers’ current reluctance to enter the housing market despite an improved housing supply outlook. Existing-home sales slid 1.0% in September. Three out of four major U.S. regions registered sales declines while the West experienced a sales bounce. … [Read more…]
Oops, mortgage rates did it again. After playing with your heart in September — briefly flirting below 6% — they’ve gone up five weeks in a row.
The 30-year fixed-rate mortgage averaged 6.6% in the week ending Oct. 24, an increase of 14 basis points over the previous week. A basis point is one one-hundredth of a percentage point.
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A long climb
Rates have climbed unceasingly in the five weeks since Sept. 19, when the 30-year mortgage averaged 5.89%. Have mortgage rates lost all their senses? No, they’ve been so typically themselves, falling when it looks as if the economy is slowing, and rising when the economy seems to be revving up:
Mortgage rates fell in September because investors knew that the Federal Reserve was about to cut short-term interest rates. There were “concerns about potentially weakening in the labor market,” said Lisa Sturtevant, chief economist for Bright MLS, a multiple listing service in the mid-Atlantic region.
But mortgage rates turned upward and then got lost in the game in early October, rising nonstop after the September employment report was released. That report showed better-than-expected job creation. There’s a risk that strong job growth could push wages higher as employers compete for workers, which in turn could stall progress on taming inflation. That possibility is pushing rates higher.
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Lower than a year ago
Housing economists are quick to remind prospective borrowers that mortgage rates have made a lot of progress. A year ago this week, the 30-year mortgage averaged 7.95%. It has fallen 1.35 percentage points since then.
“Even though rates have been on a recent upswing, they are over a full percentage point lower than a year ago, which has kept some home buyers in the market,” said Joel Kan, the Mortgage Bankers Association’s deputy chief economist, in a statement.
But the housing market is not that innocent: Lower mortgage rates are undermined by higher prices, taking some would-be buyers out of the market. The median sales price of an existing home was $404,500 in September, according to the National Association of Realtors. That’s 3% higher than a year earlier, when the median house cost less than $400,000.
First-time home buyers in September accounted for 26% of sales, which is on the low side, says Lawrence Yun, chief economist for NAR. “First-time buyers continue to struggle in the current environment.”
Yun holds out hope that September’s rate dip will end up lifting sales. “We know that the homebuying process is not a snap decision,” he says. “It’s a long process of searching for homes, signing the contract and going to the closing table. So it takes several months.”
Penn’s efforts will extend to place-based initiatives in cities like Philadelphia, Columbus, Ohio, and Memphis, Tennessee, where MBA is working to improve housing affordability. She will also collaborate with consumer advocacy groups, civil rights organizations, and affordable housing stakeholders to tackle the complex challenges facing the housing market today. Before joining MBA, Penn spent over … [Read more…]
When thinking about moving to Kansas, there are several factors to consider, such as job opportunities, lifestyle, and the overall sense of community. With its blend of peaceful small towns and thriving cities, the question naturally comes up: is Kansas a good place to live? In this article, we’ll dive into what life in Kansas looks like and provide a balanced view of the pros and cons of settling in this state. If you’re drawn to its rural charm, we’ll help you decide if Kansas could be the right fit for you.
Is Kansas a good place to live?
Living in Kansas provides residents with a balance of quiet rural charm and accessible urban conveniences, with wide-open landscapes, and a relaxed pace of life. Larger cities like Wichita and Overland Park have diverse cultural scenes, featuring theaters, galleries, and local festivals that cater to many lifestyles. The arts community flourishes, supported by institutions like the Wichita Art Museum and the annual Tallgrass Film Festival.
Additionally, if you enjoy outdoor activities, Kansas has much to offer, with an extensive network of parks, trails, and lakes ideal for hiking, biking, and fishing. The scenic Flint Hills and expansive prairies provide breathtaking settings for weekend adventures. While life in Kansas offers a laid-back lifestyle, there are still challenges to keep in mind, such as extreme weather and limited entertainment options in rural areas.
Kansas state overview
Population
2,937,880
Biggest cities in Kansas
Wichita, Overland Park, Kansas City
Average rent in Wichita
$881
Average rent in Overland Park
$1,571
Average rent in Kansas City
$962
1. Pro: Kansas has affordable living
Kansas is known for its low cost of living, making it a great place to call home. With low rental prices and relatively affordable utilities, groceries, and healthcare, residents can enjoy a higher quality of life on a modest income. Cities like Wichita and Topeka provide a variety of housing options at reasonable prices, with the average rental rate in Wichita around $900 per month and Topeka’s average at approximately $800 per month. This affordability makes Kansas especially appealing for first-time homebuyers and those seeking financial stability.
2. Con: Extreme weather conditions can disrupt daily life
Kansas experiences a wide range of weather, from blistering hot summers to frigid winters, and is prone to severe storms, including tornadoes. The state lies in the heart of Tornado Alley, making tornado preparedness a necessity for residents. Additionally, the drastic temperature swings can be difficult to adjust to, with humid summers and icy winters creating challenges for daily life. Those who prefer mild, predictable weather might find Kansas’s climate to be a significant drawback.
Insider tip: When you’re moving to Kansas, it’s essential to familiarize yourself with local tornado sirens and emergency plans, so you are prepared.
3. Pro: Friendly communities
Kansas is known for its tight-knit communities, where neighbors look out for each other and local events. The state’s small-town charm and welcoming atmosphere make it easier for newcomers to build connections. Cities and towns often host community events, such as fairs, festivals, and parades, that bring people together and celebrate local culture. This emphasis on community can make Kansas a good place to live.
4. Con: Limited entertainment options
While Kansas offers outdoor activities and events in bigger cities, the state can feel lacking in terms of urban entertainment and nightlife. Major cities like Kansas City and Wichita have some options, but they don’t compare to the nightlife scenes in larger cities like New York or Los Angeles. Bars, clubs, and trendy dining spots are fewer and farther between, leaving some residents craving more excitement. Those looking for a vibrant cultural scene or diverse entertainment options might find Kansas less stimulating.
5. Pro: Prairies, rolling hills, and beautiful skies fill the state
Kansas may not have mountains or oceans, but the prairies, rolling hills, and expansive skies make up for it. The state is home to stunning sunsets, scenic byways, and parks like the Flint Hills, which showcase the beauty of the tallgrass prairie. You can enjoy activities like hiking, fishing, and birdwatching in the state’s various nature reserves and wildlife areas. Kansas’s natural beauty provides a peaceful backdrop for those who appreciate the tranquility of the outdoors.
Insider tip: One of the best places to experience the Flint Hills is the Konza Prairie, just outside Manhattan, where you can hike the trails and even spot bison grazing in their natural habitat.
6. Con: You could feel isolated
Kansas has many rural areas, and while this provides peace and quiet, it can also lead to feelings of isolation for those who prefer a more active or connected lifestyle. In more remote areas, access to services like healthcare, shopping, and entertainment can be limited, requiring long drives to nearby towns or cities. This isolation can also mean fewer opportunities for socializing or engaging in cultural activities.
7. Pro: Strong agricultural roots
As one of the leading agricultural states in the U.S., Kansas provides a sense of pride and opportunity for those connected to farming and ranching. The state’s robust agricultural industry fuels the economy and creates a community for those involved in farming. Local farmers’ markets, agricultural fairs, and festivals celebrating the state’s farming heritage are common, adding to the charm of rural life. For those interested in a slower-paced lifestyle and a deep connection to the land, Kansas’s agricultural roots are a major draw.
Insider tip: don’t miss the Lawrence Farmers Market, held every Saturday, where you can find fresh, locally grown produce, handmade goods, and delicious baked treats—all while enjoying live music.
8. Con: Limited job market diversity
While Kansas has a strong agricultural base and growing industries in aviation and manufacturing, its overall job market lacks the diversity seen in larger states. Opportunities in fields like tech, finance, and entertainment are fewer, which may be a challenge for professionals in those sectors. Many residents need to relocate to find specialized positions or remain in more traditional job roles available within the state.
9. Pro: Low traffic and easy commutes
Kansas’s relatively low population density and well-maintained roadways make for easy commutes with minimal traffic. Whether you’re living in a city like Wichita or a smaller town, you’ll likely find that getting to work, school, or other destinations is less stressful and time-consuming compared to more congested urban areas. The lack of gridlock allows residents to enjoy a better work-life balance and more time spent at home rather than stuck in traffic.
10. Con: You’ll have to get used to the strong winds
Kansas is notorious for its strong winds, especially in the central and western parts of the state, where open plains leave little to block gusts. These high winds can be a nuisance, making outdoor activities less enjoyable and causing problems like dust storms, property damage, and increased energy consumption due to drafty homes. The constant winds can also make winters feel colder and more biting, while making summer heat even more intense.
After sustaining a 23-year high for over a year, the Federal Reserve has elected to slash the federal funds target rate by half a point, dropping from a range of 5.25%-5.50% to 4.75%-5%.
Lenders anticipated that the Fed would move to lower rates by some degree, and began adjusting mortgage rate offers ahead of the September 17-18 meeting: Rates fell 23 basis points in the week ending September 12. (A basis point is one one-hundredth of a percentage point.) This means that home shoppers who still find today’s rates out of budget shouldn’t expect more than modest drops in the coming days.
Why the Fed is moving quickly now
The Fed has held rates steady for the past 14 months in an effort to control inflation. Recent data shows that the economy is moving toward central bankers’ target inflation rate of 2% — the latest Consumer Price Index (CPI) report, a broad measure of price changes for goods and services in the U.S., shows that inflation slowed to 2.5% in August, down from 2.9% in July and 3% in June.
This data alone may have justified a softer cut of 25 basis points to keep inflation on a downward trajectory. However, job growth continued to slow in August, and a fairly weak July jobs report showed the rate of unemployment hitting a three-year high. Unemployment is a leading sign of recession, and the Fed’s decision to reduce rates by 50 basis points indicates that employment may have now eclipsed inflation as the Fed’s chief concern for the economy.
While this is good news for mortgage shoppers hoping to score a lower interest rate, the Fed’s aggressive move may reflect an effort to hold off “more rapidly deteriorating labor market conditions and weakening of the economy,” said Selma Hepp, chief economist and senior vice president at the housing data provider CoreLogic.
Lawrence Yun, chief economist at the National Association of Realtors (NAR), said that the Fed’s choice could be the result of both positive and negative factors. If an unsteady job market is the Fed’s primary motivation, it could mean that central bankers see the possibility of a recession. On the other hand, it could be a good sign “if the Fed has a solid belief that inflation is conquered, even as CPI remains at 2.5%.”
Mortgage rates have further room to fall (but home prices will rise)
Falling interest rates are likely to signal changes across the housing market. Freddie Mac’s August 2024 Outlook projects that the labor market will continue to weaken into 2025. In this scenario, Freddie Mac outlines the probability that mortgage rates will trend downward in the coming months, leading to a “significant surge in demand, mainly from the first-time home buyers left at the margins,” as well as a small uptick in housing inventory as the rate lock-in effect loosens somewhat.
With an influx of buyers and inventory remaining tight, home prices are expected to rise 2.1% in 2024 and 0.6% in 2025. Fannie Mae’s August economic development report projects that mortgage rates will average 6% in 2025.
While Fed watchers are mostly inclined to believe that another cut will come at the November 6-7 meeting, any decision by central bankers will be informed by trends in new economic data as it emerges. One CPI report and two jobs reports will be released between now and then, and what they reveal about the rates of inflation, unemployment and job growth will be a major indicator of when and how the Fed may choose to shift rates.
How home buyers can move forward
Market traders were divided over predictions of what central bankers would do in the days leading up to this September meeting. Those currently shopping for a mortgage should remember that mortgage rates will continue responding to expectations of what the Fed will do, rather than waiting for central bankers to take action. If additional rate cuts are expected, we could see mortgage rates fall even further before the November meeting.
There’s no perfect way to time the market, and buyers holding out for mortgage rates to hit their lowest point will have to contend with greater competition and higher home prices. While it’s understandable to want to get the best deal, the “right time to buy” is determined by personal factors as much as economic ones.
If you can afford to move forward with your homebuying plans now and want to take advantage of refinancing later, you can benefit from strategically keeping your closing costs as low as possible, since you’ll have to pay them again when refinancing. For example, if you’re hoping to refinance in the next year or so, it wouldn’t make sense to pay for points that lower your mortgage rate at closing right now.
However, while it can be useful to think about your refinancing plans when considering your closing options, it’s not recommended that you commit to a mortgage you cannot comfortably afford with an expectation that you’ll refinance later. The lack of consensus among industry experts going into this meeting should underscore the fact that it’s too risky to rely on a concrete timeline of when rates will hit your specific target.
The association’s chief economist Lawrence Yun said in a statement accompanying the release that a “wait-and-see” approach appeared to be taking hold as buyers look ahead to the potential economic impact of the upcoming presidential election, scheduled for November 5. He highlighted the New England region as one of the few causes for optimism in … [Read more…]
While the so-called mortgage “lock-in” effect has seen many homeowners decide to stay in place because of their current low mortgage rate, rather than list their property and face much higher borrowing costs with a new mortgage, that trend could be easing. NAR’s chief economist Lawrence Yun told reporters after the release of the latest … [Read more…]
At the risk of jinxing it, things are looking up for home buyers.
The average rate on a 30-year fixed rate mortgage has dropped for three consecutive months (and counting). Competition has calmed down a bit — and inflation has, too. And while we’re still technically in a sellers’ market, the inventory of homes for sale in June reached its highest level in more than four years.
Hoping to buy in 2024? If you’re well prepared with a budget and a mortgage preapproval, you might not even need to knock on wood. Let’s look at the good news, the challenges and the wild cards that remain for home buyers this year.
Good news: Mortgage rates drop to a one-year low
Finally, some relief: In the week ending Aug. 15, 30-year mortgage rates dropped to an average 6.28%, their lowest weekly average since February 2023. That’s welcome news for shoppers who have felt burned by high rates — or maybe even put their house hunt on ice until the cost of borrowing cooled down.
Over the past two years, 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. 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 7% interest rate, you could afford to borrow $270,600. But at a 6% interest rate, you could afford to borrow $300,200 — nearly $30,000 more — for the same amount per month. When interest rates go down, home shoppers’ purchasing power goes up.
For now, economic signals suggest more positive news for buyers in the latter half of 2024. Dan Moralez, regional vice president at Dart Bank in Holland, Michigan, points to a cooling economy and a potential cut to the federal funds rate. “All of that stuff really lends itself to mortgage rates getting better and the cost to borrow getting cheaper, which is really good for those people who have maybe sat on the sidelines hoping to see rates get better,” Moralez says.
More good news: It’s nearly certain the Federal Reserve will cut the federal funds rate by at least 25 basis points at its next meeting Sept. 17-18, according to CME Group’s FedWatch tool. (A basis point is one one-hundredth of one percent.) While the Fed doesn’t set mortgage rates directly, the federal funds rate influences the cost of long-term loans, including mortgages.
Your strategy: If you’re ready to buy, jump in now
A potential Fed rate cut is welcome news, but in the meantime, it’s not a reason to put off your search. Changes take time to trickle down, so avoid the self-induced pressure of timing the market perfectly. Instead, focus on shopping within your budget right now.
Also: When rates go down, competition goes up — another reason there’s no time like the present to start house hunting.
Whichever way rates move in the remainder of 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.
One final tip about rates: Do your research before picking a mortgage lender with the flashiest discount. This year, some lenders have been 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). Each option could potentially save money, but Moralez says it could also be “smoke and mirrors” if the 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.”
Good news: More inventory, less intense competition
Recently, the supply of homes for sale could be summed up in two words: Slim pickings.
But in June, shoppers got some good news: The number of existing homes for sale reached a four-year high, according to the National Association of Realtors (NAR). Nationwide, there was a 4.1-month supply of homes for sale, meaning it would take just over four months at the current pace for all properties to sell. The U.S. market hasn’t seen that much housing inventory since May 2020, when the supply was 4.5 months.
Demand still outpaces supply, but with more homes to choose from, buyers are less likely to encounter intense bidding wars reminiscent of the pandemic years. Houses for sale are getting fewer offers compared to last year, according to the NAR’s June 2024 Realtors Confidence Index, a survey of its members. In June, a home listed for sale received an average 2.9 offers, compared to 3.5 offers in June 2023.
Another sign of cooling competition: Houses are staying on the market longer. In June, 65% of homes sold in less than a month, compared to 75% at the same time last year. The median time on the market in June was 22 days, a full four days longer than June 2023, when the median time on the market was 18 days.
With pending home sales also on the rise in June, NAR Chief Economist Lawrence Yun says he expects to see even more houses getting listed ahead of typical seasonal declines in winter. “The rise in housing inventory is beginning to lead to more contract signings,” Yun said in a news release. “Multiple offers are less intense, and buyers are in a more favorable position.”
Your strategy: Cast a wide net
While an improvement from recent years, a 4.1-month supply of homes for sale is still technically a seller’s market. A balanced market has about a six-month supply of homes for sale; a buyer’s market has more than six months’ worth.
You can’t control who puts their house on the market, so in the meantime, focus on the options available now. 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.
“Last year, we certainly didn’t have enough houses — and we still don’t,” says Ellie Kowalchik, a real estate agent who leads the Move2Team with Keller Williams Pinnacle Group in Cincinnati, Ohio. “Don’t wait until the spring to start looking.”
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.
Still challenging: Home prices climb to record highs
While some aspects of homebuying have gotten easier as 2024 rolls on, one challenge remains: home prices. The sales price of existing homes has risen for 12 straight months, according to the NAR. In June, the national median sales price hit a record high of $426,900.
As more inventory hits the market, though, the degree of home price growth has slowed somewhat over the summer, according to an August 2024 report from ICE Mortgage Technology. Still, if you compare the cost of buying a house to the median household income, July 2024 was one of the least affordable months to buy a home in more than three decades. Why? Home prices are growing faster than wages, and on top of that, high mortgage rates increase the cost of borrowing.
Until supply catches up to demand, prices are unlikely to fall. Realtor.com estimates prices will fall less than 2% by the end of 2024. No one can predict exactly what the market will do, but if you’re an optimist, there’s reason to be hopeful that prices are reaching a plateau.
“Even as the median home price reached a new record high, further large accelerations are unlikely,” Yun said in a press release. “Supply and demand dynamics are nearing a balanced market condition.”
That’s another reason to jump in now: A big drop in prices could trigger more competition.
Your strategy: Make a budget and stick to it
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.
Wild card: Changes to real estate commissions
One of the year’s biggest shakeups has been a major legal settlement with the NAR, which changes the way your buyer’s agent gets paid. While the NAR admitted to no wrongdoing, it will pay $418 million to settle more than a dozen antitrust lawsuits accusing the organization of enforcing rules that inflated real estate commissions. These changes take effect Aug. 17.
Previously, home sellers generally set the agents’ commission — typically 5% to 6% of the home sale price that was then split between the buyer’s and seller’s agent. Now, a new system is in place: You’ll have to sign a contract with your buyer’s agent, which spells out the terms of how they get paid.
For now, many real estate brokerages will likely stick with the familiar commission structure of a percentage of the sales price. But the settlement opens the door for new ways for agents to get paid, such as a flat fee or an hourly rate. Time will tell what becomes the new standard.
Your strategy: Brush up on your negotiating skills
When hiring a buyer’s agent, be polite but firm when negotiating. If the commission is more than you want to spend, ask if the agent would be willing to lower it. Point out any fees you don’t understand. And if you still aren’t comfortable with the terms, it’s OK to shop around or walk away.
While the new rules are more complex, they also give you, the buyer, more leverage in negotiating for your best interests. Buying a home is a big journey, and when you sign that contract with a buyer’s agent, you should feel supported and empowered about the business relationship that lies ahead.
The bottom line: Set realistic expectations
Things are looking better compared to the beginning of this year, but if you haven’t found a house yet, it’s fair to feel bummed out about high costs and complexity.
The solution: Think long-term. Holding out for lower rates or “perfect” buying conditions 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.”
Mortgage rates mostly leveled off in the week ending Aug. 15, following last week’s comparatively precipitous drop.
30-year fixed-rate mortgages fell one basis point to 6.28%. A basis point is one one-hundredth of a percentage point.
While rates may be cooling slightly, home prices continue to heat up around the country.
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Median home prices hit mega millions in some metro areas
The sale prices of single-family existing homes rose in the second quarter of 2024 in 89% of tracked metro areas, according to the National Association of Realtors (NAR).
Within these areas, three metros saw price gains of nearly 20%: Racine, WI (19.8%), Glen Falls, NY (19.8%) and El Paso, TX (19.2%). The national median single-family existing-home price grew 4.9% from this time last year, reaching $422,100.
Seven of the top 10 most expensive metros at the end of Q2 are in California. The most expensive metro measured was San Jose-Sunnyvale-Santa Clara, where the median home price grew 11.6% to an eye-watering $2,008,000.
NAR Chief Economist Lawrence Yun acknowledged that this is a boon for homeowners who continue to see their equity bloat, while would-be buyers face an even steeper climb up the economic ladder. “It’s difficult for those wanting to buy a home as the required income to qualify has roughly doubled from just a few years ago,” he said.
In fact, the national median home sale price is $100,000 more than in Q2 2019, in which the St. Louis Federal Reserve pegs at $322,500. That’s an increase of nearly 31% in just five years. To add additional perspective, the average 30-year mortgage rate never went above 4.65% in all of 2019, compared to 2024’s peak (so far) of 7.448% in May.
While price growth may seem discouraging, it is decelerating
Those in the market to buy a home may find these numbers disheartening, but price growth is ever-so-slightly slowing down. The national median home price increased 4.9% in Q2, compared to 5% in Q1. And though sale prices rose in 89% of tracked metro areas in Q2, this is down from 93% in Q1.
10% of tracked metro markets actually saw price declines, up from 7% in Q1.
If you’re planning to purchase a home, there are steps you can take now to maximize affordability — namely, shopping around for the best rate.
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NAR chief economist Lawrence Yun commented on the implications of these record prices: “It’s terrific news for homeowners who are moving ahead in wealth gains. However, it’s difficult for those wanting to buy a home as the required income to qualify has roughly doubled from just a few years ago.” Price appreciation in cities In … [Read more…]