Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the 30-year fixed-rate mortgage (FRM) averaged 6.39 percent.
“The 30-year fixed-rate mortgage averaged 6.39 percent this week, as economic crosscurrents have kept rates within a ten-basis point range over the last several weeks,” said Sam Khater, Freddie Mac’s Chief Economist. “After the substantial slowdown in growth last fall, home prices stabilized during the winter and began to modestly rise over the last few months. This indicates that while affordability remains a hurdle, homebuyers are getting used to current rates and continue to pursue homeownership.”
NAR Senior Economist and Director of Real Estate Research Nadia Evangelou said of this week’s mortgage rate rise week that these fluctuations in rates will continue to persist, affecting the housing market as mortgage rates have a direct impact on the monthly mortgage payment. But with inflation easing further and the Federal Reserve expected to pause its rate hikes soon, mortgage rates will stabilize near 6% in the second half of the year.
With a 6.4% rate, the typical buyer can afford to purchase a home up to $380,000 – $9,000 or 2% less than the median-priced home if they put 20% down. About 45% of the listings are in this price range. For buyers who decide to put 14% down – the median down payment in 2022 – they will need to look for less expensive homes up to $355,000.
The PMMS® is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit.
Check with your mortgage lender for more information on daily mortgage interest rate changes. You can also visits sites online such as Mortgage News Daily.
If you’re thinking about selling your house, you should know the number of homes for sale right now is low. That’s because, this season, there are fewer sellers listing their houses for sale than the norm.
Looking back at every April since 2017, the only year when fewer sellers listed their homes was in April 2020, when the pandemic hit and stalled the housing market (shown in red in the graph below). In more typical years, roughly 500,000 sellers add their homes to the market in April. This year, we saw fewer than 400,000 sellers entering the market in April (see graph below):
While there are a number of factors contributing to this trend, one thing keeping inventory low right now is that some homeowners are reluctant to move when the mortgage rate they have on their current house is lower than the one they could get today on their next house. It’s called rate lock.
As a recent survey from Realtor.com explains, 56% of people who are planning to sell in the next 12 months say they’re waiting for rates to come down.
While this wait-and-see approach is right for some sellers, it also creates an opening for more eager sellers to jump in now.
If your current house truly doesn’t fit your needs anymore and you’re ready to move, don’t miss this chance to stand out. When fewer sellers are putting their homes up for sale, buyers will have fewer options, so you set yourself up to get the most eyes possible on your house. That’s why your house could see multiple offers as buyers compete over the limited supply of homes for sale – especially if you price it right.
As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“Inventory levels are still at historic lows . . . Consequently, multiple offers are returning on a good number of properties.”
If you’re ready to sell now, beat the competition before it comes onto the market. If you do, your house should stand out and could get multiple offers. Let’s connect to get you market ready.
Freddie Mac (OTCQB: FMCC) today (05/11/2023) released the results of its Primary Mortgage Market Survey (PMMS), showing the 30-year fixed-rate mortgage (FRM) averaged 6.35 percent.
“This week’s decrease continues a recent sideways trend in mortgage rates, which is a welcome departure from the record increases of last year,” said Sam Khater, Freddie Mac’s Chief Economist. “While inflation remains elevated, its rate of growth has moderated and is expected to decelerate over the remainder of 2023. This should bode well for the trajectory of mortgage rates over the long-term.”
The PMMS is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit.
Check with your mortgage lender for more information on daily mortgage interest rate movements. Or you may find information online on sites such as Mortgage News Daily.
But the data clearly shows today’s market is very different than it was before the housing crash in 2008. Rest assured, this isn’t a repeat of what happened back then. Here’s why.
It was much easier to get a home loan during the lead-up to the 2008 housing crisis than it is today. Back then, banks had different lending standards, making it easy for just about anyone to qualify for a home loan or refinance an existing one. As a result, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices.
Things are different today as purchasers face increasingly higher standards from mortgage companies. The graph below uses data from the Mortgage Bankers Association (MBA) to show this difference. The lower the number, the harder it is to get a mortgage. The higher the number, the easier it is.
Unemployment Recovered Faster This TimeWhile the pandemic caused unemployment to spike over the last couple of years, the jobless rate has already recovered back to pre-pandemic levels (see the blue line in the graph below). Things were different during the Great Recession as a large number of people stayed unemployed for a much longer period of time (see the red in the graph below):
Here’s how the quick job recovery this time helps the housing market. Because so many people are employed today, there’s less risk of homeowners facing hardship and defaulting on their loans. This helps put today’s housing market on stronger footing and reduces the risk of more foreclosures coming onto the market.
There were also too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Today, there’s a shortage of inventory available overall, primarily due to years of underbuilding homes.
The graph below uses data from the National Association of Realtors (NAR) and the Federal Reserve to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just a 2.6-months’ supply. There just isn’t enough inventory on the market for home prices to come crashing down like they did in 2008.
That low inventory of homes for sale helped keep upward pressure on home prices over the course of the pandemic. As a result, homeowners today have near-record amounts of equity (see graph below):
And, that equity puts them in a much stronger position compared to the Great Recession. Molly Boesel, Principal Economist at CoreLogic, explains:
“Most homeowners are well positioned to weather a shallow recession. More than a decade of home price increases has given homeowners record amounts of equity, which protects them from foreclosure should they fall behind on their mortgage payments.”
The graphs above should ease any fears you may have that today’s housing market is headed for a crash. The most current data clearly shows that today’s market is nothing like it was last time.
“Downsizing is somewhat common among older people and retirees who no longer have children living at home. But these days, younger people are also looking to downsize to save money on housing . . .”
And when inflation has made most things significantly more expensive, saving money where you can has a lot of appeal. So, if you’re thinking about ways to budget differently, it could be worthwhile to take your home into consideration.
When you think about cutting down on your spending, odds are you think of frequent purchases, like groceries and other goods. But when you downsize your house, you often end up downsizing the bills that come with it, like your mortgage payment, energy costs, and maintenance requirements. Realtor.com shares:
“A smaller home typically means lower bills and less upkeep. Then there’s the potential windfall that comes from selling your larger home and buying something smaller.”
That windfall is thanks to your home equity. If you’ve been in your house for a while, odds are you’ve developed a considerable amount of equity. Your home equity is an asset you can use to help you buy a home that better suits your needs today.
And when you’re ready to make a move, your team of real estate experts will be your guides through every step of the process. That includes setting the right price for your house when you sell, finding the best location and size for your next home, and understanding what you can afford at today’s mortgage rate.
If you’re thinking about downsizing, ask yourself these questions:
Once you know the answers to these questions, meet with a real estate advisor to get an answer to this one: What are my options in the market right now? A local housing market professional can walk you through how much equity you have in your house and how it positions you to win when you downsize.
If you’re looking to save money, downsizing your home could be a great help toward your goal. Let’s connect to talk about your goals in the housing market this year.
Data from the latest ShowingTime Showing Index, which is a measure of buyers actively touring homes, helps paint the picture of how much buyer demand has increased in recent months (see graph below):
As the graph shows, the first two months of 2023 saw a noticeable increase in buyer traffic. That’s likely because the limited number of homes for sale kept shoppers looking for homes even during colder months.
To help tell the story of why the latest report is significant, let’s compare foot traffic this February with each February for the last six years (see graph below). It shows this was one of the best Februarys for buyer activity we’ve seen in recent memory.
In the last six years, we saw the most February buyer traffic in 2021 and 2022 (shown in green above), but those years were highly unusual for the housing market. So, if we compare February 2023 with the more normal, pre-pandemic years, data shows this year still marks a clear rise in buyer activity.
The uptick in buyer traffic is even more noteworthy considering the increase in mortgage rates this February. The Freddie Mac 30-year fixed mortgage rate rose from 6.09% during the week of February 2nd to 6.50% in the week of February 23rd. But even with higher rates, more buyers were looking for a home.
Jeff Tucker, Senior Economist at Zillow, says the increased buyer activity could continue:
“More buyers will keep coming out of the woodwork. We always see a seasonal uptick in home shoppers in March and April . . .”
If you’re looking to sell your house, seeing buyers still active in the market this year should be encouraging. It’s a sign buyers are out there and could be looking for a home just like yours. Working with a real estate professional to list your house now will help you get your home in front of eager buyers today.
Rising foot traffic is a bright spot for this year’s housing market and indicates that buyers are looking to purchase this year, even with higher mortgage rates. If you’re ready to sell your house, let’s connect.
“. . . the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years.”
While a recession may be on the horizon, it won’t be one for the housing market record books like the crash in 2008. What we have to remember is that a recession doesn’t always lead to a housing crisis.
To prove it, let’s look at the historical data of what happened in real estate during previous recessions. That way you know why you shouldn’t be afraid of what a recession could mean for the housing market today.
To show that home prices don’t fall every time there’s a recession, it helps to turn to historical data. As the graph below illustrates, looking at recessions going all the way back to 1980, home prices appreciated in four of the last six of them. So historically, when the economy slows down, it doesn’t mean home values will always fall.
Most people remember the housing crisis in 2008 (the larger of the two red bars in the graph above) and think another recession will be a repeat of what happened to housing then. But today’s housing market isn’t about to crash because the fundamentals of the market are different than they were in 2008. Back then, one of the big reasons why prices fell was because there was a surplus of homes for sale at the same time distressed properties flooded the market. Today, the number of homes for sale is low, so while home prices may see slight declines in some areas and slight gains in others, a crash simply isn’t in the cards.
What a recession really means for the housing market is falling mortgage rates. As the graph below shows, historically, each time the economy slowed down, mortgage rates decreased.
Bankrate explains mortgage rates typically fall during an economic slowdown:
“During a traditional recession, the Fed will usually lower interest rates. This creates an incentive for people to spend money and stimulate the economy. It also typically leads to more affordable mortgage rates, which leads to more opportunity for homebuyers.”
This year, mortgage rates have been quite volatile as they’ve responded to high inflation. The 30-year fixed mortgage rate has hovered between roughly 6-7%, and that’s impacted affordability for many potential homebuyers.
But, if there is a recession, history tells us mortgage rates may fall below that threshold, even though the days of 3% are behind us.
You don’t need to fear what a recession means for the housing market. If we do have a recession, experts say it will be mild and short, and history shows it also means mortgage rates go down.
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©2022 Coldwell Banker. All Rights Reserved. Coldwell Banker and the Coldwell Banker logos are trademarks of Coldwell Banker Real Estate LLC. The Coldwell Banker® System is comprised of company owned offices which are owned by a subsidiary of Anywhere Advisors LLC and franchised offices which are independently owned and operated. The Coldwell Banker System fully supports the principles of the Fair Housing Act and the Equal Opportunity Act.
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