2 Reasons Why Today’s Mortgage Rate Trend Is Good for Sellers
2 Reasons Why Today’s Mortgage Rate Trend Is Good for Sellers If you’ve been holding off on selling your house to make a move because you felt mortgage rates were too high, their recent downward trend is exciting news for you. Mortgage rates have descended since last October when they hit 7.79%. In fact, they’ve been below 7% for over a month now (see graph below): And while they’re not going back to the 3% we saw during the ‘unicorn’ years, they are expected to continue to go down from where they are now in the near future. As Dean Baker, Senior Economist at the Center for Economic Research, explains: “It also appears that mortgage rates are now falling again. They will almost certainly not fall to pandemic lows, although we may soon see rates under 6.0 percent, which would be low by pre-Great Recession standards.” Here are two reasons why this recent trend, and the expectation it’ll continue, is such good news for you. You May Not Feel as Locked-In to Your Current Mortgage Rate With mortgage rates already significantly lower than they were just a few months ago, you may feel less locked-in to the current mortgage rate you have on your house. When mortgage rates were higher, moving to a new home meant possibly trading in a low rate for one up near 8%. However, with rates dropping, the difference between your current mortgage rate and the new rate you’d be taking on isn’t as big as it was. That makes moving more affordable than it was just a few months ago. As Lance Lambert, Founder of ResiClub, explains: “We might be at peak “lock-in effect.” Some move-up or lifestyle sellers might be coming to terms with the fact 3% and 4% mortgage rates aren’t returning anytime soon.” More Buyers Will Be Coming to the Market According to data from Bright MLS, the top reason buyers have been waiting to take the plunge into homeownership is high mortgage rates (see graph below): Lower mortgage rates mean buyers can potentially save money on their home loans, making the prospect of purchasing a home more attractive and affordable. Now that rates are easing, more buyers are likely to feel they’re ready to jump back into the market and make their move. And more buyers mean more demand for your house. Bottom Line If you’ve been waiting to sell because you didn’t want to take on a larger mortgage rate or you thought buyers weren’t out there, the recent decline in mortgage rates may be your sign it’s time to move. When you’re ready, let’s connect.
What Lower Mortgage Rates Mean for Your Purchasing Power
What Lower Mortgage Rates Mean for Your Purchasing Power If you want to buy a home, it's important to know how mortgage rates impact what you can afford and how much you’ll pay each month. Fortunately, rates for 30-year fixed mortgages have come down significantly since the end of October and are currently under 7%, according to Freddie Mac (see graph below): This recent trend is great news for buyers. As a recent article from Bankrate says: “The rate cool-off somewhat eases the housing affordability squeeze.” And according to Edward Seiler, AVP of Housing Economics and Executive Director of the Research Institute for Housing America at the Mortgage Bankers Association (MBA): “MBA expects that affordability conditions will continue to improve as mortgage rates decline . . .” Here’s a bit more context on how this could help with your plans to buy a home. How Mortgage Rates Affect Your Search for a Home Understanding the connection between mortgage rates and your monthly home payment is crucial for your plans to become a homeowner. The chart below illustrates how your ability to afford a home changes when mortgage rates shift. Imagine your budget allows for a monthly payment between $2,400 and $2,500. The green part in the chart shows payments in that range or lower (see chart below): As you can see, even small changes in rates can affect your budget and the loan amount you can afford. Get Help from Reliable Experts To Understand Your Budget and Plan Ahead When you're looking to buy a home, it's important to get guidance from a local real estate agent and a trusted lender. They can help you explore different mortgage options, understand what makes mortgage rates go up or down, and how those changes impact you. By looking at the numbers and the latest data together and then adjusting your strategy based on today's rates, you'll be better prepared and ready to buy a home. Bottom Line If you’re looking to buy a home, you should know the recent downward trend in mortgage rates is good news for your move. Let’s connect and plan your next steps.
Why Now Is Still a Great Time To Sell Your House
Why Now Is Still a Great Time To Sell Your House If you were worried buyer demand disappeared when mortgage rates went up, the data shows there are plenty of interested buyers still out there. The housing market isn't as frenzied as it was during the ‘unicorn’ years when buyer demand was through the roof, mortgage rates were historically low, and home values rose like we’ve never seen before. But that doesn’t mean the market is at a standstill. Nationally, demand is still high compared to the last normal years in the housing market and plenty of buyers are making moves right now. Here’s the data to prove it. Showing Traffic Is Up The ShowingTime Showing Index is a measure of how frequently buyers are touring homes. The graph below uses that index to show buyer activity over the past eight Octobers: In the graph, the ‘unicorn’ years are shown in pink. You can see demand has dipped some since then. That’s in response to higher mortgage rates. But, when you compare 2023 to the blue bars on the left that represent the last normal years in the market (2018-2019), you can tell buyers are still more active than the norm. But showing traffic isn’t the only way to see buyer demand is still high. The number of offers other sellers are getting and the average days homes are on the market tell the same story. Sellers Are Still Seeing Multiple Offers According to the latest data from the National Association of Realtors (NAR), sellers are receiving an average of 2.5 offers on their houses. Let’s look at how that compares to recent years (see graph below): It’s true that’s fewer than the number of offers sellers were receiving during the ‘unicorn’ years (shown in pink). But compared to last year, the number is up slightly. And it’s higher than it was in the more normal, pre-‘unicorn’ years in the housing market too. Homes Priced Right Are Selling Fast And it’s not just that sellers are still typically getting multiple offers more than the norm, they’re also seeing their homes sell fast. That’s a direct result of strong buyer demand. According to Zillow: “. . . low inventory levels are spurring surprisingly strong competition . . . demand has remained resilient, and attractive, appropriately priced listings are moving quickly.” To help showcase that homes for sale are still going quickly, let’s look at data from NAR on the median days on market for this same time of year from 2018 through now (see graph below): As the graph shows, this year homes are sitting on the market only slightly longer than they were during the frenzy of the ‘unicorn’ years. And compared to the last normal years in the market, homes are still selling much faster than they did back then. That’s good news for sellers because it means there are eager buyers out there right now. Bottom Line You haven't missed your chance to sell at a time when sellers are receiving multiple offers, and homes are selling fast. When you’re ready to sell your house, let’s connect to get the ball rolling.
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