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Source: cbsnews.com
Over the past two years, the Federal Reserve has raised interest rates to a range of 5.25% to 5.5%, marking a 22-year high, in a bid to cool rapid inflation. The policy resulted in the effective rate on a 30-year mortgage soaring above 8% last year, though it has declined from that peak in subsequent … [Read more…]
Mortgage rate declines from their two-decade peak in October are allowing buyers to buy homes worth tens of thousands of dollars more than they did a few months ago, according to real-estate platform Redfin.
Prospective buyers able to afford $3,000 monthly payments are well-suited to acquire a home priced at $453,000 at a 6.7 percent home loan cost compared to $416,000 when rates hovered near 8 percent. That means buyers are potentially able to add $40,000 to the cost of the home they can buy, Redfin pointed out.
Mortgage rates soared to around 8 percent on the back of the Federal Reserve’s hiking of rates beginning in March 2022 to the current range of 5.25 to 5.5 percent to battle inflation that had at one point skyrocketed to a 40-year high. Recent economic news suggests that inflation has slowed and the market now expects the Fed to begin cutting rates sometime this year.
This shift has contributed to a fall in rates over the last few to under 7 percent sparking activity in the housing market. As of January 25, the 30-year fixed-rate mortgage stood at 6.69 percent, according to Freddie Mac.
The drop in rates has also given buyers the potential to save hundreds of dollars in monthly mortgage payments. A typical home selling at $363,000 at a 6.7 percent mortgage will mean an estimated monthly outlay of $2,545. The same home would have cost an owner more than $2,700 in monthly payments when rates had jumped to nearly 8 percent in November, according to Redfin.
The market is starting to shift as a result of these potential savings with buyers coming out of the sidelines and looking to buy.
“Late last year, many listings sat on the market as buyers sat on the sidelines, hoping for rates to drop,” Shoshana Godwin, a Redfin Premier agent in Seattle, said in a statement. “Now, buyers are snapping up homes because even though rates haven’t plummeted, people are realizing that the longer they wait to buy a home, the more competition they’re likely to face.”
Redfin analysts are forecasting mortgage rates to decline over the months ahead with some level of fluctuations over the year.
Freddie Mac chief economist Sam Khater suggested last week that should mortgage rates continue to trend downwards, spring could be a busy season for the housing market.
“Potential homebuyers with affordability concerns have jumped off the fence back into the market. Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace,” Khater said in a statement.
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
If you’re having a tough time getting home loan financing using a mortgage broker or a local mortgage lender, consider contacting a portfolio lender directly to close your mortgage.
They can offer solutions that others cannot, and may have just what you’re looking for. For example, a portfolio lender may be willing to offer you a no-down payment mortgage while others are only able to give you a loan up to 97% loan-to-value (LTV).
The same might be true if you have bad credit, a high DTI ratio, or any other number of issues that could block you from obtaining traditional mortgage financing.
In short, a “portfolio loan” is one that is kept in the bank or mortgage lender’s loan portfolio, meaning it isn’t sold off on the secondary market.
By servicing the loans themselves and keeping them in portfolio, these lenders are able to take on greater amounts of risk, or finance loans that are outside the credit box because they don’t need to be resold to investors with specific underwriting guidelines.
These companies have the ability to bend the rules when they see a deal worth doing, whereas mortgage lenders that must adhere to Fannie Mae, Freddie Mac, and the FHA have very little wiggle room.
You see, most loans that are sold off are backed by Fannie and Freddie, or the FHA in the case of FHA loans, so very rigid underwriting standards must be met without exception.
Portfolio lenders, on the other hand, can create their own underwriting guidelines because they aren’t at the mercy of an outside agency if they’re actually willing (and able) to keep the loans they make.
A lot of small and mid-size lenders don’t have the same authority because they must sell their loans off on the secondary mortgage market due to liquidity constraints. And investors are becoming increasingly selective as to which loans are actually purchased.
Many mortgages today are originated by one entity, such as a mortgage broker or mortgage lender, and then quickly resold to investors who earn money from the repayment of the loan over time.
Gone are the days of the neighborhood bank offering you a mortgage and expecting you to repay it over 30 years, culminating in you walking down to the branch with your final payment in hand. Well, there might be some, but it’s now the exception rather than the rule.
In fact, this is part of the reason why the mortgage crisis took place in the early 2000s. Because originators no longer kept the home loans they made, they were happy to take on more risk.
After all, if they weren’t the ones holding the loans, it didn’t matter how they performed, so long as they were underwritten based on acceptable standards. They received their commission for closing the loan, not based on loan performance.
Today, you’d be lucky to have your originating bank hold your mortgage for more than a month. And this can be frustrating, especially when determining where to send your first mortgage payment. Or when attempting to do your taxes and receiving multiple form 1098s.
This is why you have to be especially careful when you purchase a home with a mortgage or refinance your existing mortgage. The last thing you’ll want to do is miss a monthly payment right off the bat.
So keep an eye out for a loan ownership change form in the mail shortly after your mortgage closes. If your loan is sold, it will spell out the new loan servicer’s contact information, as well as when your first payment to them is due.
Now back to portfolio loans. If you’re having a tough time getting approved for a mortgage, or finding a particular type of loan, consider a portfolio lender.
As noted, these types of mortgage lenders can offer things the competition can’t because they’re willing to keep the loans on their books, instead of relying on an investor to buy the loans shortly after origination.
They also offer mortgages that fall outside the guidelines of Fannie Mae, Freddie Mac, the FHA, the VA, and the USDA.
That’s why you might hear that a friend or family member was able to get their mortgage refinanced with U.S. Bank or a similar portfolio lender despite having a low credit score or a high LTV.
So if you’re in need of a $5 million jumbo loan, or an interest-only mortgage, or something else that might be considered unique, look to portfolio lending to solve your financing woes.
They may also be able to work with you if you’ve experienced a recent credit event, such as a late mortgage payment, a short sale, or a foreclosure. Really, anything that falls outside the box might be considered by one of these lenders.
Some of the largest portfolio lenders include Chase, U.S. Bank, and Wells Fargo, but there are many smaller players like Bank of Internet, BancorpSouth, Caliber Home Loans, and Wintrust Mortgage.
Now let’s talk about portfolio loan mortgage rates, which as you might suspect, may not be as low as the competition.
Ultimately, many mortgages originated today are commodities because they tend to fit the same underwriting guidelines of an outside agency like Fannie, Freddie, and the FHA.
As such, the differentiating factor is often rate and closing costs, since they’re all basically selling the same thing. You may also see customer service, or in the case of Rocket Mortgage by Quicken Loans, a quirky ad campaign and some unique technology.
For portfolio lenders who offer a truly unique product, loan pricing could be entirely up to them, within what is reasonable. If the loan program is really special, and only offered by them, expect rates significantly higher than what a typical market rate might be.
If their portfolio home loan program is just slightly more flexible than what the agencies mentioned above allow, mortgage rates may be comparable or just a bit higher.
It really depends on your particular loan scenario, how risky it is, if others lenders offer similar financing, and so on.
At the end of the day, a portfolio loan is a solution that isn’t offered by every bank, so you should go into it expecting a higher rate. But if you can get the deal done, it might be a win regardless.
Source: thetruthaboutmortgage.com
Mortgage interest rates were mostly down compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 5/1 ARMs and jumbo loans decreased, while rates for 15-year fixed mortgages increased.
Mortgage rates could gradually come down this year, according to Greg McBride, CFA, Bankrate chief financial analyst. Mortgage rates cooled at the tail end of 2023 with the Federal Reserve pausing its campaign of rate hikes to tame inflation. The central bank now expects to cut rates in 2024 — a direction that would affect many areas of the economy, including on the 10-year Treasury, a key benchmark for fixed-rate mortgages.
“The 10-year Treasury yield that serves as a baseline for fixed mortgage rates will have a bouncy journey lower, moving back above 4 percent early in 2024 but trending lower as inflation cools and the Fed gets closer to cutting rates,” says McBride. “For mortgage rates, that portends a general downtrend — albeit with fits and starts — in 2024.”
Rates accurate as of January 31, 2024.
The rates listed here are averages based on the assumptions here. Actual rates displayed on-site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Wednesday, January 31st, 2024 at 7:30 a.m.
The average rate you’ll pay for a 30-year fixed mortgage today is 6.96 percent, down 7 basis points from a week ago. This time a month ago, the average rate on a 30-year fixed mortgage was higher, at 7.06 percent.
At the current average rate, you’ll pay $662.62 per month in principal and interest for every $100,000 you borrow. That’s down $4.70 from what it would have been last week.
Use Bankrate’s mortgage rate calculator to estimate your monthly payments and see how much you’ll save by adding extra payments. The tool will also help you calculate how much interest you’ll pay over the life of your loan.
The average rate for a 15-year fixed mortgage is 6.49 percent, up 1 basis point since the same time last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $871 per $100,000 borrowed. The bigger payment may be a little tougher to find room for in your monthly budget than a 30-year mortgage payment, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much more quickly.
The average rate on a 5/1 adjustable rate mortgage is 6.12 percent, ticking down 1 basis point from a week ago.
Adjustable-rate mortgages, or ARMs, are mortgage loans that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for people who expect to sell or refinance before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.12 percent would cost about $607 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.
The average rate for the benchmark jumbo mortgage is 7.00 percent, down 6 basis points over the last week. A month ago, the average rate for jumbo mortgages was greater than 7.00, at 7.13 percent.
At the average rate today for a jumbo loan, you’ll pay a combined $665.30 per month in principal and interest for every $100,000 you borrow. That’s $4.04 lower, compared with last week.
The average 30-year fixed-refinance rate is 7.16 percent, down 2 basis points over the last seven days. A month ago, the average rate on a 30-year fixed refinance was higher, at 7.21 percent.
At the current average rate, you’ll pay $676.08 per month in principal and interest for every $100,000 you borrow. That’s $1.35 lower, compared with last week.
The Federal Reserve has signaled that it intends to cut rates in 2024, depending on inflation and employment data and other factors. The Fed meets again on Jan. 31.
As of mid-January, the average 30-year fixed rate mortgage sits at just under 7 percent. As the year progresses, expect rates to slowly trend downward, says McBride.
“Mortgage rates will spend the bulk of the year in the 6s, with movement below 6 percent confined to the back half of the year,” says McBride.
The rates on 30-year mortgages mostly follow the 10-year treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves. These broader factors influence overall rate movement. As a borrower, you could be quoted a higher or lower rate compared to the trend.
While mortgage rates change daily, it’s unlikely we’ll see rates back at 3 percent any time soon. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
Keep in mind: You could save thousands over the life of your mortgage by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
Source: bankrate.com
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Luxury home prices have hit an all-time high, rising at twice the pace of non-luxury homes, Redfin wrote in a report on Wednesday. While high mortgage rates have crushed the rest of the housing market, wealthy buyers have enough cash to pay for a home upfront, free from the rate “lock-in effect.”
“Luxury prices are rising at twice the rate of non-luxury prices largely because so many affluent buyers are able to buy homes in cash, rendering today’s elevated mortgage rates irrelevant,” the release stated. “High mortgage rates have a more chilling effect on the rest of the market, upping interest payments and keeping price increases modest.”
A typical US luxury home cost $1.17 million as of the end of last year, up 8.8% from a year earlier. Compare that to the price of a non-luxury home, which rose 4.6% to a record $340,000.
Redfin defines a luxury home as “those estimated to be in the top 5% of their respective metro area based on market value.” Non-luxury homes fall in the 35th to 65th percentile.
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The share of rich homebuyers paying all cash in the luxury home market rose to a record 46.5% in the fourth quarter of 2023. That’s up from 40% a year ago.
“A lot of luxury buyers are coming in with cash, snapping up expensive homes,” a Redfin Premier agent, Heather Mahmood-Corley, said. “High-end homes are selling fast, especially in desirable areas like luxurious Scottsdale, or Tempe, which West Coast transplants love because it’s centrally located. One client recently bought a house in Tempe, flipped it, and it sold for $1.4 million in two days.”
What’s driving the surge is not just the fact that wealthy Americans can skip taking out a home loan. It’s also that the supply of luxury homes is still low, driving up competition and pushing bid prices higher.
The luxury housing market as a whole is performing well, and new luxury listings have risen 19.7% year-on-year — the biggest jump in two years, according to Redfin. The total number of luxury homes on the market also rose by 13%. Sales dipped by 1.7%, but that’s the smallest decline the market has seen since 2021.
Source: businessinsider.com
2. Early in the labor market recovery, when we saw some weaker job reports, I doubled and tripled down on my assertion that job openings would get to 10 million in this recovery. Job openings rose all the way to 12 million and are currently a bit over 9 million. Even with the massive miss on a job report in May 2021, I didn’t waver. You can read about that here.
3. I wrote that we should get back all the jobs lost to COVID-19 by September of 2022. At the time this would be a speedy labor market recovery, and it happened on schedule, too
4. This is the key one for right now!
If COVID-19 didn’t happen, we would have between 157 million and 159 million jobs today, which would have been regular with where job growth was running in February of 2020. Today, we are at 157 million! The reason this is so important is because job growth should be cooling down right about now. So, ignore this report and the last revisions and look at the trend of job growth data, it looks perfectly fine. At this stage of the economic cycle, the jobless claims data is more key, and right now, that data isn’t flashing red signals yet. 323,000 on the 4-week moving average has been my line in the sand, and we aren’t close to that yet.
With all that said, it isn’t surprising that the 10-year yield is still above 4% because I favor labor data over inflation. I can’t claim higher rates based on the growth rate of inflation data, but I can based on labor data. I say this because I don’t believe the Fed has pivoted yet. On to the report.
From BLS: Total nonfarm payroll employment rose by 353,000 in January, and the unemployment rate remained at 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry.
Here are the jobs that were created and lost in the previous month:
In this jobs report, the unemployment rate for education levels looks like this:
So what should be made of this jobs report since other data lines show the labor market is less tight? Go with the trend; the job growth numbers are slowing down on schedule, but the labor market isn’t breaking.
Over the next 12 months, the trend data will clearly show what I am talking about, as the last 12 months of the labor data have also shown. We must learn to separate the slowdown in job growth from the labor market breaking. This is why I have stressed the 323,000 jobless claims data since 2022. We traditionally have one to two reports a year that beat positive and one to two reports a year that miss. Don’t put your weight on one to two reports — focus on the trend and all the labor data put together.
Source: housingwire.com
National mortgage rates were mostly down compared to a week ago, according to rates data collected by Bankrate. Average rates for 30-year fixed, 5/1 ARMs and jumbo loans receded, while rates for 15-year mortgages increased.
Mortgage rates could gradually come down this year, according to Greg McBride, CFA, Bankrate chief financial analyst. Rates began retreating in the back half of 2023 as inflation continued to cool and the Federal Reserve halted rate increases. The central bank now forecasts rate cuts in 2024 — a move that would have broad economic impact, including on the 10-year Treasury, a key benchmark for fixed-rate mortgages.
“The 10-year Treasury yield that serves as a baseline for fixed mortgage rates will have a bouncy journey lower, moving back above 4 percent early in 2024 but trending lower as inflation cools and the Fed gets closer to cutting rates,” says McBride. “For mortgage rates, that portends a general downtrend — albeit with fits and starts — in 2024.”
Rates accurate as of January 29, 2024.
The rates listed here are marketplace averages based on the assumptions shown here. Actual rates available on-site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Monday, January 29th, 2024 at 7:30 a.m.
The average rate you’ll pay for a 30-year fixed mortgage today is 6.99 percent, down 4 basis points over the last week. Last month on the 29th, the average rate on a 30-year fixed mortgage was unchanged, at 6.99 percent.
At the current average rate, you’ll pay principal and interest of $664.63 for every $100,000 you borrow. That’s down $2.69 from what it would have been last week.
The 30-year mortgage is the most popular home loan, and it has a number of advantages. Among them:
The average rate for the benchmark 15-year fixed mortgage is 6.50 percent, up 1 basis point over the last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost approximately $871 per $100,000 borrowed. The bigger payment may be a little harder to find room for in your monthly budget than a 30-year mortgage payment, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much faster.
The average rate on a 5/1 ARM is 6.12 percent, down 26 basis points over the last week.
Adjustable-rate mortgages, or ARMs, are mortgage loans that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These types of loans are best for people who expect to refinance or sell before the first or second adjustment. Rates could be materially higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.12 percent would cost about $607 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.
The average jumbo mortgage rate today is 7.02 percent, down 5 basis points from a week ago. A month ago, the average rate was above that, at 7.05 percent.
At the average rate today for a jumbo loan, you’ll pay a combined $666.65 per month in principal and interest for every $100,000 you borrow. That represents a decline of $3.36 over what it would have been last week.
The average 30-year fixed-refinance rate is 7.19 percent, down 3 basis points over the last seven days. A month ago, the average rate on a 30-year fixed refinance was lower, at 7.14 percent.
At the current average rate, you’ll pay $678.11 per month in principal and interest for every $100,000 you borrow. That’s a decline of $2.03 from last week.
The Federal Reserve has signaled that it intends to cut rates in 2024, depending on inflation and employment data and other factors. The Fed meets again on Jan. 31.
Current average 30-year mortgage rates are slightly below 7 percent as of mid-January. As the year progresses, expect rates to slowly trend downward, says McBride.
“Mortgage rates will spend the bulk of the year in the 6s, with movement below 6 percent confined to the back half of the year,” says McBride.
The rates on 30-year mortgages mostly follow the 10-year treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves. These broader factors influence overall rate movement. The specific rate you’d qualify for is tied to your credit score, loan type and other variables.
While mortgage rates change daily, it’s unlikely we’ll see rates back at 3 percent any time soon. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
You could save serious money on interest by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
Source: bankrate.com
“Long-term” is a subjective measurement, but in this case, it refers to the the past 7 or 8 months. Today’s mortgage rates dropped to levels that–until 2 other recent days in late December–haven’t been seen since May, 2023. In other words, we’re effectively at 8 month lows today, even if those lows aren’t very different from the lows in late December.
This week’s precipitous drop came courtesy of factors other than the slate of economic data. That’s interesting because we’d been eagerly anticipating this week’s econ data as a potential source of volatility. Instead, it was a friendly update from the U.S. Treasury on its borrowing plans (something that can have a big, indirect impact on mortgage rates by altering the supply/demand equation in the Treasury market which then spills over into the mortgage market).
All of the above means that Friday morning’s jobs report is our first significant opportunity to see a big move in rates that’s driven by economic data. As is always the case ahead of this report, the reaction could easily take rates quite a bit higher or lower. It can also thread the needle and keep things fairly flat.
The market is expecting the job count to drop to 180k from last month’s 216k. A lower number would likely keep low rates intact, and a much lower number would allow for new longer-term lows. Conversely, a number over 200k would be more likely to put upward pressure on rates. It’s not uncommon for the actual number to come in roughly 100k away from the forecast level. The farther from forecast, the likely we are to see the big reaction.
Source: mortgagenewsdaily.com
Louisville, like the nation, continues to see rising single-family home prices amid low inventory.
Rising interest rates in 2023 sidelined many potential homebuyers and provided little appetite to potential home sellers sitting on much lower interest rates.
Median home prices rose 3.6% last year in the greater Louisville area over 2022, according to the Greater Louisville Association of Realtors. New listings were down 10% and closed sales were down 15%.
“Brutal,” Mike Frank, a senior mortgage broker at Homestretch Mortgage in Louisville, said of 2023. “That was my worst year in the business last year. That’s because everybody was scared because the market turned so fast and rates were at 8%.”
it was likely done raising interest rates after more than a year of hikes meant to slow inflation. It also signaled three rate cuts could be coming in 2024.
Lowering this rate is expected to lead to lower mortgage rates, which hit a 23-year high in October 2023 at nearly 7.8%.
the typical down payment for first-time (8%) and repeat (19%) buyers, according to the National Association of Realtors), a 30-year mortgage with a 7% interest rate would mean monthly payments of about $1,600 (not including homeowner’s insurance or property taxes). Drop the interest rate to 6% and the payment falls to about $1,440.
“It going to get people off of the fence,” Frank said of potential home buyers. “I don’t think (the rates) are gonna go too much lower, but at least it’s gonna get people to go, ‘Ok, maybe this is the time.'”
Last year marked the worst year on record for home sales in the United States since 1995, according to the National Association of Realtors.
In the greater Louisville area, December 2023 marked the 24th consecutive month of year-over-year declines in existing home sales. Real estate agents compare months year-over-year instead of month-to-month because of seasonal trends in real estate.
Redfin. Nearly 60% have a rate below 4%.
“How do you convince those people that this is a great time to move?” he said.
He anticipates the more rates drop toward the rates that homeowners currently have, the more likely they’ll be to take the rising equity they have in their home and go shopping for a new one.
“If we can close the gap that we have between rates that homeowners got a few years ago versus current market rates, that could help push a few more homes into the market,” he said.
An imbalance of buyers and available homes has made for a persistent seller’s market, a trend local real estate agents don’t see changing any time soon.
Those in the real estate industry consider three to six months of supply (how long it would take for the existing supply of homes on the market to sell at the current sales pace) to be a “balanced” market favorable to both buyers and sellers.
traced back to the Great Recession when many homebuilders went out of business and those that remained didn’t resume building at previous rates.
Even with a projected drop in interest rates, DeWalt said she’s not anticipating the frenzy of the 2020 and 2021 housing market that saw intense bidding wars and the waiving of contingencies, such as home inspections.
“I don’t see it being as crazy like that this coming year, even with more buyers coming on because of the interest rates,” she said. “They’re not gonna drop that low.”
national Realtors association, in a recent news release. “If price increases continue at the current pace, the country could accelerate into haves and have-nots.”
Schuler said he anticipates 2024 will “be a more normal year of what real estate used to be like pre-pandemic,” with its most challenging aspect being expectation management for both buyers and sellers.
“From a home seller standpoint, they’ll need to understand … their property will not sell within three hours,” he said. “All they’ve heard for the past three to four years and all they’ve seen on social media and then the news are homes selling for above asking price, multiple offers, waiving any and every contingency. Whereas now that’s not the case.”
Buyers, meanwhile, may feel buoyed by news of interest rates dropping, but they’re still up against a challenging inventory issue.
“From a home buyer standpoint, they’re still gonna have to understand the fact that inventory levels continue to be historically low,” he said. “So if you have your list of everything you want and need in a home, you’re going to have to be understanding that you probably won’t get all of those items, and chances are you still will be paying 98% of the listing price.”
Even if rates fall, Schuler and Frank encouraged prospective home buyers to analyze their budget and focus on what a potential monthly payment would be.
“We instruct our clients that you live in your payment,” he said. “So try not to just focus so much on the price of the home or the rate. Let’s just look at the monthly payment. Can you comfortably live with this monthly payment? Yes or no?”
Different loan programs have varying parameters that will shape a monthly payment, Frank said, yet another consideration for people as they weigh entering the market.
“We would be naive to think that the rate doesn’t matter because it does,” Frank said. “But there are other factors that really come into play.”
Growth & development reporter Matthew Glowicki can be reached at [email protected], 502-582-4000 or on Twitter @mattglo.
Source: courier-journal.com