The Impact of Inflation on Mortgage Rates

The Federal Reserve’s (the Fed) decision to raise the Federal Funds Rate last week had an impact on the housing market. During high inflation, expenses such as gas and groceries start increasing and in this case, raising the Federal Funds Rate is an effort to lower inflation. The Fed’s decision doesn’t directly determine what will happen with mortgage rates; however, it is expected that lower inflation rates will also cause mortgage rates to fall. Experts believe that mortgage rates will descend later in the year as the consumer price inflation calms down. If you are unclear on these projected changes and how they may impact your homeownership plans, it’s best to contact a trusted real estate professional who stays up to date on market changes. Finally, at Daytona Beach Property Search, you can find many popular home searches.

Why Today’s Housing Market Is Not About To Crash

There has been concern recently that the housing market may be headed for a crash. Although, given the affordability challenges in the housing market and the recession talks in the media, the worry is understandable. However, the data clearly shows that today’s market is much different than it was before the housing crash in 2008. Here’s why:

Getting a home loan was much easier during the 2008 housing crisis than today, as lending standards were different which gave homeowners the opportunity to qualify for a home loan or refinance an existing one. This allowed lending institutions to take on a lot of risk in both the person and the mortgage product offered. Consequently, there were mass defaults, foreclosures, and falling prices. Currently, potential property purchasers face higher standards from mortgage firms.

While the pandemic resulted in a spike in unemployment over the last couple of years, the jobless rate has already recovered back to pre-pandemic levels. During the Great Recession, many people stayed unemployed for a more extended period, which was different from what occurred this time due to a swift job recovery. Considering that many people are employed today, there’s less risk of homeowners facing hardship and defaulting on loans. This helps put today’s housing market in good stead, and there’s a lower risk of more foreclosures coming onto the market.

During the housing crisis, there were many homes for sale (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Today, there’s a shortage of inventory available overall, mainly due to years of underbuilding homes. The unsold inventory is at just a 2.6-months’ supply, and this time there just isn’t enough inventory on the market for home prices to come crashing down like they did in 2008.

The low inventory of homes available 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, which puts them in a much stronger position compared to the Great Recession.

The graphs in the article indicate that today’s housing market is headed for a crash as there’s a shortage of inventory, homeowners have a lot of equity, and unemployment rates have returned to pre-pandemic levels. The current data clearly shows that today’s market is nothing like what occurred in 2008.

It May Be Time To Consider a Newly Built Home

If you’re trying to buy a house in today’s market, you may find that there are very limited options available for sale. It might feel like an uphill battle to find the perfect home for you because there just isn’t that much to choose from. If you want to open up your options, then you should consider a newly built home. According to the latest data from the US Census, there’s positive news when it comes to new home construction. When you look at the first three months of this year, you’ll find that more new homes are completed and ready to sell. This gives you more options for your search, and builders have started construction on more single-family homes as well. This means that there are more homes intended for one household in the beginning stages of construction, allowing you the opportunity to customize one to your liking. And, while this is all good news for broadening your options for your home search, there are other perks that come with considering a newly built home.

When you buy a new home under construction, you can tailor it to your unique needs and taste. Building a home also means customizing it so you can have the certain kind of flooring, sunroom, or any other special amenity you have been dreaming of. Another perk of a new home is that nothing in the house is used. It’s all brand new and uniquely yours from day one. Moreover, because everything is new, you’ll likely find there are fewer maintenance and repair needs upfront. If something does go wrong with your new home, many builders also include additional home warranties. Lastly, building a home gives you the opportunity to incorporate more energy-efficient options that can help lower your costs over time.

If you’re having trouble finding your dream home in today’s market, it may be time to consider newly built homes as an option. Partner with a real estate professional to learn more about what’s available in your local area.

Reasons To Sell Your House Today [INFOGRAPHIC]

Reasons To Sell Your House Today [INFOGRAPHIC] Simplifying The Market

Some Highlights

  • There are a number of reasons why it still makes sense to sell your house today.
  • Inventory is low, which means that your house will stand out. Additionally, the number of offers on recently sold homes is on the rise.
  • Most homeowners have a lot of equity, which can fuel a move.
  • If you’re thinking about selling your house, reach out to a local real estate expert to discuss if now may be the time to move.
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Buyer Activity Is Up Despite Higher Mortgage Rates

Reports show that despite the rise in mortgage rates, home buyers seem to be more active this year. The ShowingTime Showing Index data revealed a promising trend during the first two months of the year, indicating an increase in buyer demand. Even in February, when colder temperatures would usually curb activity, buyer traffic surged because of the limited number of homes available for sale. Comparing February’s foot traffic with the past six years’ activity confirms that this year was one of the best Februarys for home buyer activity. The data suggests that more homebuyers were on the lookout for their dream abode, even with the upsurge in mortgage rates. This increased buyer activity may indicate that the housing market is still going strong this year, with home buyers eagerly searching for suitable homes. For sellers looking to put their homes up for sale, this report provides some good news as real estate professionals can aid in listing and bringing your home to the attention of potential buyers.

The Three Factors Affecting Home Affordability Today

The Three Factors Affecting Home Affordability Today Simplifying The Market

There’s been a lot of focus on higher mortgage rates and how they’re creating affordability challenges for today’s homebuyers. It’s true that rates climbed dramatically since the record-low we saw during the pandemic. But home affordability is based on more than just mortgage rates – it’s determined by a combination of mortgage rates, home prices, and wages.

Considering how each one of these factors is changing gives you the full picture of home affordability today. Here’s the latest.

1. Mortgage Rates

While mortgage rates are higher than they were a year ago, they’ve hovered primarily between 6% and 7% for nearly eight months now (see graph below):

As the graph shows, mortgage rates have experienced some volatility during that time. And even a small change in mortgage rates impacts your purchasing power. That’s why it’s so important to lean on your team of real estate professionals for expert advice to stay up to date on what’s happening in the market. While it’s hard to project where mortgage rates will go from here, many experts agree they’ll likely continue to remain around 6%-7% in the immediate future. 

2. Home Prices

Over the past few years, home prices appreciated rapidly as the record-low mortgage rates we saw during the pandemic led to a surge in buyer demand. The heightened buyer demand happened while the supply of homes for sale was at record lows, and that imbalance put upward pressure on home prices. However, today’s higher mortgage rates have slowed down price appreciation.

And, the truth is, home price appreciation varies by market. Some areas are seeing slight declines while others have prices that are climbing. As Selma Hepp, Chief Economist at CoreLogic, explains:

“The divergence in home price changes across the U.S. reflects a tale of two housing markets. Declines in the West are due to the tech industry slowdown and a severe lack of affordability after decades of undersupply. The consistent gains in the Southeast and South reflect strong job markets, in-migration patterns and relative affordability due to new home construction.”

To find out what’s happening with prices in your local market, reach out to a trusted real estate agent.

3. Wages

The most positive factor in affordability right now is rising income. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have grown over time: 

Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage since you don’t have to put as much of your paycheck toward your monthly housing cost.

Home affordability comes down to a combination of rates, prices, and wages. If you have questions or want to learn more, reach out to a real estate professional who can explain what’s happening locally and how these factors work together.

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If you’re planning to buy a home, knowing the key factors that impact affordability is important so you can make an informed decision. To stay up to date on the latest on each, connect with a trusted real estate professional today.

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What Are the Experts Saying About the Spring Housing Market?

What Are the Experts Saying About the Spring Housing Market? Simplifying The Market

The housing market’s been going through a lot of change lately, and there’s been uncertainty surrounding what will happen this spring. You may be wondering if more homes will go on the market, what’s next with home prices and mortgage rates, or what the best advice is for someone in your position right now.

Here’s what industry experts are saying right now about the spring housing market and what it means for you:

Selma Hepp, Chief Economist, CoreLogic:

“We see more competition among buyers . . . Housing supply also tends to grow during the spring months. And this is also the time of year when relatively more migration happens, as people graduate and move elsewhere looking for jobs.”

Greg McBride, Chief Financial Analyst, Bankrate:

“I don’t expect big moves in prices in the span of a month, but like the flower buds of spring, the housing market is showing signs of improvement. A pick up in activity with inventory still low does bode well for home prices.”

Rick Sharga, Founder and CEO, CJ Patrick Company:

“If you can find a home you love and can afford at today’s prices, don’t wait. Home prices in most of the country are unlikely to crash, and mortgage rates will only come down very gradually if they decline at all this year.” 

Jeff Tucker, Senior Economist, Zillow:

“The market is still much friendlier this spring for buyers who can overcome affordability hurdles, but buyers are going to see more competition than they might expect because there are not many homes on the market to go around. New listings are increasing, which they almost always do this time of year, but not nearly as quickly as usual.”

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If you’re thinking about selling your house, this spring’s a great time to do so while inventory is still so low. And if you’re in a good position to buy, lean on your team of expert advisors for the best advice. Whatever your plans, work with a real estate agent to make sure you’re able to navigate the spring housing market with confidence.

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Think Twice Before Waiting for Lower Home Prices

Think Twice Before Waiting for Lower Home Prices Simplifying The Market

As the housing market continues to change, you may be wondering where it’ll go from here. One factor you’re probably thinking about is home prices, which have come down a bit since they peaked last June. And you’ve likely heard something in the news or on social media about a price crash on the horizon. As a result, you may be holding off on buying a home until prices drop significantly. But that’s not the best strategy.

A recent survey from Zonda shows 53% of millennials are still renting right now because they’re waiting for home prices to come down. But here’s the thing: the most recent data shows that home prices appear to have bottomed out and are now on the rise again. Selma Hepp, Chief Economist at CoreLogic, reports:

“U.S. home prices rose by 0.8% in February . . . indicating that prices in most markets have already bottomed out.”

And the latest data from Black Knight shows the same shift. The graph below compares home price trends in November to those in February:

So, should you keep waiting to buy a home until prices come down? If you factor in what the experts are saying, you probably shouldn’t. The data shows prices are increasing in much of the country, not decreasing. And the latest data from the Home Price Expectation Survey indicates that experts project home prices will rise steadily and return to more normal levels of appreciation after 2023. The best way to understand what home values are doing in your area is to work with a local real estate professional who can give you the latest insights and expert advice.

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James Jestes, Your new favorite Realtor.

Hello my name is James Jestes and I am a Broker Associate with eXp Realty.  I am dedicated to helping you find your perfect new home. I’m a no hassle, no pressure agent here to help you accomplish your real estate goals. Please reach out to me and let me know how I can help you purchase or sell your home.

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