In short, the housing market is abuzz with excitement over a new day dawning! Last week, the average rate on a 30-year fixed mortgage fell to 6.35%, according to Freddie Mac. This decrease is the biggest weekly decrease we’ve had in the last 12 months. It’s given us the lowest mortgage rates in 11 months. Buyers are beginning to take notice. Other Realtors are indeed seeing an increase in activity, indicative of lower borrowing costs finally persuading unsure buyers to make a move after a long wait.
The recent drop in mortgage rates has helped encourage a little more buyer activity. Nicole Stewart, an agent with Redfin in Boise, Idaho, was on fire over the recent Labor Day weekend. In less than 48 hours, she wrote four offers and got three of them under contract! This type of activity would point to a change as more would-be homebuyers start to feel ready to make a move.
So says Matt Vernon, the head of consumer lending at Bank of America, with good news for homebuyers. Moderately lower mortgage rates are providing them some greater relief. In his remarks, he conveyed a mood of reserved optimism about the path forward for the market. Throughout the association, the mood was one of cautious optimism,” Mr. Vernon said. He welcomed the growing enthusiasm. Yet this change, while positive, has not had a tangible impact on buyers’ perception of the persistent issues that they are facing.
The price of shelter continues to be a leading issue in the minds of Americans and is a hot button issue for politicians. US President Donald Trump had done so before. He wanted the Federal Reserve to cut interest rates to make it easier for Americans to obtain mortgages. Julia Fonseca, former associate professor of city and regional planning at the University of Illinois Urbana-Champaign, makes a key distinction. Even as every rate decline makes the market slightly less painful, she cautions that there’s no indication of major relief coming anytime soon. “We could be quite a bit closer to normalizing these markets than we realize,” she said.
Despite the current drop in mortgage rates, the majority of homeowners have locked in rates significantly lower than the current average. In fact, approximately four out of five mortgage borrowers locked in rates less than 6.35%. This has understandably made borrowers of those loans hesitant to sell their homes and lose those favorable terms. This tightfistedness with homes is likely one big factor factoring into ongoing deep inventory droughts in the market.
Now, prospective homebuyers have some more options to consider as the housing market continues to shift amid changing economic conditions. Aileen Barrameda, who plans to buy a house in Los Angeles in the coming months, expressed her urgency to enter the market. “I have the ability, so I better get in the market while I can. Homes are just going to keep getting more expensive,” she said.
Back on the East Coast, in Boise, Idaho, Kristin Carlson has spent the last four years researching the housing market as a renter. She concluded by noting that for her, the recent shifts have created a sense of urgency. Today, she thinks she’s “that much closer to pulling the trigger” on a purchase. Her sentiment is shared by an increasing number of first-time buyers who’ve been patiently awaiting a return to more favorable conditions.
While some experts see positive trends emerging from lower mortgage rates, others remain cautious about their overall impact on the housing sector. As we noted earlier this summer, even Fed Chair Jerome Powell has said that it would need to take dramatic shifts in rates to dramatically shift housing dynamics. Most experts agree that the housing sector would require a bigger move in rates to have a meaningful impact.
Climate-smart agriculture
This policy change would be hugely influential in developing the market.
