Why Mortgage Rates Could Continue To Decline
Why Mortgage Rates Could Continue To Decline When you read about the housing market, you’ll probably come across some information about inflation or recent decisions made by the Federal Reserve (the Fed). But how do those two things impact you and your homebuying plans? Here's what you need to know. The Federal Funds Rate Hikes Have Stalled One of the Fed’s primary goals is to lower inflation. In order to do that, they started raising the Federal Funds Rate to slow down the economy. Even though this doesn’t directly dictate what happens with mortgage rates, it does have an impact. Recently, inflation has started to cool, a signal those increases worked and are bringing inflation back down. As a result, the Fed’s hikes have gotten smaller and less frequent. In fact, there haven’t been any increases since July (see graph below): And not only has the Fed decided not to raise the Federal Funds Rate the last three times the committee met, they’ve signaled there may actually be rate cuts coming in 2024. According to the New York Times (NYT): “Federal Reserve officials left interest rates unchanged in their final policy decision of 2023 and forecast that they will cut borrowing costs three times in the coming year, a sign that the central bank is shifting toward the next phase in its fight against rapid inflation.” This indicates the Fed thinks the economy and inflation are improving. Why does that matter to you and your plans to buy a home? It could end up leading to lower mortgage rates and improved affordability. Mortgage Rates Are Coming Down Mortgage rates are influenced by a wide variety of factors, and inflation and the Fed’s actions (or as has been the case recently, inaction) play a big role. Now that the Fed has paused the increases, it looks more likely mortgage rates will continue their downward trend (see graph below): Although mortgage rates may remain volatile, their recent trend combined with expert forecasts indicate they could continue to go down in 2024. That would improve affordability for buyers and make it easier for sellers to move since they won’t feel as locked-in to their current, low mortgage rate. Bottom Line The Fed’s decisions have an indirect impact on mortgage rates. By not raising the Federal Funds Rate, mortgage rates are likely to continue declining. Let’s connect so you have expert advice about changes in the housing market and how they affect you.
Down Payment Assistance Programs Can Help Pave the Way to Homeownership
Down Payment Assistance Programs Can Help Pave the Way to Homeownership If you’re looking to buy a home, your down payment doesn’t have to be a big hurdle. According to the National Association of Realtors (NAR), 38% of first-time homebuyers find saving for a down payment the most challenging step. But the reality is, you probably don’t need to put down as much as you think: Data from NAR shows the median down payment hasn’t been over 20% since 2005. In fact, the median down payment for all homebuyers today is only 15%. And it’s even lower for first-time homebuyers at 8%. But just because that’s the median, it doesn’t mean you have to put that much down. Some qualified buyers put down even less. For example, there are loan types, like FHA loans, with down payments as low as 3.5%, as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants. But let’s focus in on another valuable resource that may be able to help with your down payment: down payment assistance programs. First-Time and Repeat Buyers Are Often Eligible According to Down Payment Resource, there are thousands of programs available for homebuyers – and 75% of these are down payment assistance programs. And it’s not just first-time homebuyers that are eligible. That means no matter where you are in your homebuying journey, there could be an option available for you. As Down Payment Resource notes: “You don’t have to be a first-time buyer. Over 39% of all [homeownership] programs are for repeat homebuyers who have owned a home in the last 3 years.” The best place to start as you search for more information is with a trusted real estate professional. They’ll be able to share more information about what may be available, including additional programs for specific professions or communities. Additional Down Payment Resources That Can Help Here are a few down payment assistance programs that are helping many of today’s buyers achieve the dream of homeownership: Teacher Next Door is designed to help teachers, first responders, health providers, government employees, active-duty military personnel, and veterans reach their down payment goals. Fannie Mae provides down-payment assistance to eligible first-time homebuyers living in majority-Latino communities. Freddie Mac also has options designed specifically for homebuyers with modest credit scores and limited funds for a down payment. The 3By30 program lays out actionable strategies to add 3 million new Black homeowners by 2030. These programs offer valuable resources for potential buyers, making it easier for them to secure down payments and realize their dream of homeownership. For Native Americans, Down Payment Resource highlights 42 U.S. homebuyer assistance programs across 14 states that ease the path to homeownership by providing support with down payments and other associated costs. Even if you don’t qualify for these types of programs, there are many other federal, state, and local options available to look into. And a real estate professional can help you find the ones that meet your needs as you explore what’s available. Bottom Line Achieving the dream of having a home may be more within reach than you think, especially when you know where to find the right support. To learn more about your options, let’s connect.
The Surprising Trend in the Number of Homes Coming onto the Market
The Surprising Trend in the Number of Homes Coming onto the Market If you're considering moving, it's important to know what's happening in the housing market. Here's an update on the supply of homes currently for sale. Whether you're buying or selling, you should pay attention to the number of homes in your area. In the housing market, regular patterns happen every year, called seasonality. Spring is the peak homebuying season and also when most homes are typically listed for sale (homes coming onto the market are known in the industry as new listings). In the second half of each year, new listings typically decrease as the sales pace slows down. The graph below uses data from Realtor.com to provide a visual of this seasonality. It shows how this year (the black line) is breaking from the norm (see graph below): Looking at this graph, three things become clear: 2017-2019 (the blue and gray lines) follow the same general pattern. These years were very typical in the housing market and their lines on the graph show normal, seasonal trends. Starting in 2020, the data broke from the normal trend. The big drop down in 2020 (the orange line) signals when the pandemic hit and many sellers paused their plans to move. 2021 (the green line) and 2022 (the red line) follow the normal trend a bit more, but still are abnormal in their own ways. This year (the black line) is truly unique. The steep drop off in new listings that usually occurs this time of year hasn’t happened. If 2023 followed the norm, the line representing this year would look more like the dotted black line. Instead, what’s happening is the number of new listings is stabilizing. And, there are even more new listings coming to the market this year compared to the same time last year. What Does This Mean for You? For buyers, new listings stabilizing is a positive sign. It means you have a more steady stream of options coming onto the market and more choices for your next home than you would have at the same time last year. This opens up possibilities and allows you to explore a variety of homes that suit your needs. For sellers, while new listings are breaking seasonal norms, inventory is still well below where it was before the pandemic. If you look again at the graph, you’ll see the black line for this year is still lower than normal, meaning inventory isn’t going up dramatically, and prices aren’t heading for a crash. And with less competition from other sellers than you’d see in a typical year, your house has a better chance to be in the spotlight and attract eager buyers. Bottom Line Whether you're on the hunt for your next home or thinking of selling, now might be the perfect time to make your move. If you have questions or concerns about the availability of homes in our local area, let’s connect.
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