Norada Real Estate Investments

Archives for May 2024

Mortgage Rates Drop, Inventory Up: Housing Market Update

by

Good news for house hunters! Mortgage rates have dipped for the second week in a row, according to Freddie Mac. While this decrease is small, it might provide some much-needed breathing room for potential buyers struggling with high borrowing costs. Experts caution, however, that rates are likely to remain elevated in the near future. So, what should homebuyers do?

Here are some tips for homebuyers in today's market:

  • Consider a larger down payment: By putting more money down upfront, you can reduce the overall loan size and minimize your monthly payments, even with a high interest rate.

Now, let's talk about what this means for sellers.

Here's some encouraging news: the number of homes for sale has reached a four-year high! This is a significant milestone, especially for buyers who have been facing limited inventory for quite some time. There's a caveat, though. While overall seller activity is on the rise, the number of new listings coming onto the market has actually slowed down. This suggests that the pace of growth in available homes might be starting to ease.

Despite this, there's still a lot to be happy about for potential buyers. Homes are priced competitively, with a significant influx of listings in the budget-friendly $200,000 to $350,000 range. This abundance of choice, combined with a slight dip in mortgage rates, could help to temper price increases compared to last year.

The one area where the market seems to be cooling slightly is in the pace of sales. Homes are taking a day or two longer to sell compared to this time last year. Again, the culprit here is likely mortgage rates. If rates continue to decrease, we can expect to see a renewed surge in buyer activity, leading to quicker sales.

The good news? Even with the slowdown, homes are still selling faster than they were pre-pandemic. So, whether you're a buyer or a seller, there are positive takeaways from the latest housing market data. For buyers, a slight dip in rates and a surge in listings offer more opportunities. Sellers can benefit from a market that's still tilted in their favor, with strong buyer demand. Remember, staying informed and adapting your strategy based on current trends is key to navigating the ever-changing housing market.

Summary of Key Takeaways:

Group Key Takeaways
Buyers Mortgage rates have dipped slightly. There is an abundance of listings in the budget-friendly range. Consider a larger down payment to offset high mortgage rates.
Sellers The number of homes for sale is at a four-year high. The pace of sales is slowing down.

Further Insights:

While the recent developments in the housing market paint a promising picture, it's essential to delve deeper into the nuances of the current landscape. Despite the surge in listings and a slight dip in mortgage rates, challenges and uncertainties persist, shaping the experiences of both buyers and sellers.

For buyers, the decision-making process extends beyond mere financial considerations. While a larger down payment can mitigate the impact of high mortgage rates, it's crucial to assess long-term financial stability and housing needs. Additionally, navigating the competitive market requires diligence and flexibility, as preferences and priorities may evolve throughout the homebuying journey.

Similarly, sellers must carefully evaluate market dynamics and pricing strategies to maximize their returns. While the increase in listings presents opportunities for attracting potential buyers, effective marketing and presentation play pivotal roles in standing out amidst competition. Furthermore, understanding local market trends and buyer preferences can inform strategic decisions, ultimately influencing the success of the selling process.

In essence, while falling mortgage rates and a surge in listings offer promising prospects for both buyers and sellers, success in the housing market hinges on adaptability, informed decision-making, and a comprehensive understanding of evolving trends and dynamics.

By staying informed, leveraging available resources, and working closely with experienced professionals, individuals can navigate the complexities of the housing market with confidence, making informed decisions that align with their goals and aspirations.

Remember, whether you're embarking on the journey of homeownership or exploring opportunities in the real estate market, proactive engagement and a holistic approach are key to achieving desired outcomes and realizing your housing dreams.

I hope this additional information provides valuable insights into the multifaceted dynamics of the current housing market.

RELATED POSTS:

Mortgage Rates Predictions 2024: Will Rates Go Down?

Mortgage Rate Predictions for Next 3 Years: Double Digit Rise

Mortgage Rate Predictions for Next 5 Years

Mortgage Rate Predictions for the Next 2 Months

2024 Mortgage Rate Predictions: Will Rates Drop Below 7%?

Mortgage Rates HIT NEW LOW: Predictions &: What it Means for You

Housing Starts and Permits Decline as Mortgage Rates Rise

by

The housing market continues to be a two-sided coin. Let's dissect the latest data for April 2024 and unpack its meaning for real estate investors, incorporating the nitty-gritty details to inform your investment strategies.

Housing Starts and Permits Fall Short as Mortgage Rates Rise

Rising Rates Put Builders on Hold (Building Permits Down)

Spiking mortgage rates are causing builders to hit the pause button. New home construction in April came in lower than expected and permits for future projects dipped. Building permits for privately-owned housing units authorized in April were at a seasonally adjusted annual rate of 1,440,000.

This represents a 3.0% decrease from the revised March rate (1,485,000) and a 2.0% decline compared to April 2023 (1,470,000). This suggests builders are adopting a wait-and-see approach as borrowing costs climb due to the Federal Reserve's decision to maintain high interest rates.

Starts Stall, But Completions Climb (Starts Mixed, Completions Surge)

Intriguingly, while groundbreaking for new homes slowed down (privately-owned housing starts clocked in at a seasonally adjusted annual rate of 1,360,000, reflecting a 5.7% increase from March but 0.6% lower than April 2023), builders are diligently working to finish projects already in the pipeline.

Completions of single-family homes, in particular, jumped a significant 15% compared to March. This could be a sign that the inventory crunch may finally ease up, potentially offering some relief to buyers. Here's a breakdown of the key figures:

  • Total housing starts: 1,360,000 (up 5.7% from March, down 0.6% from April 2023)
  • Single-family starts: 1,031,000 (down 0.4% from March)

On the other hand, single-family home starts dipped slightly (0.4% decrease from March). This suggests a cautious approach to new single-family construction despite the overall increase in total housing starts. However, the real story lies in completions:

  • Total housing completions: 1,623,000 (up 8.6% from March, up 14.6% from April 2023)
  • Single-family completions: 1,092,000 (up 15.4% from March)

This surge in completions (1,623,000, exceeding both March's estimate and April 2023's figure) could translate into a bit more breathing room for buyers, especially first-timers who've been squeezed out by low inventory and high prices.

Builder Sentiment Takes a Dip

The National Association of Home Builders (NAHB) reported a decline in builder sentiment for the first time since November. This indicates that builders are less optimistic about the market's future. Higher interest rates, tighter lending standards (reflected in the decrease in building permits), and a general air of uncertainty are all contributing factors.

The mixed bag of data from April underscores the importance of staying informed as a real estate investor. While national trends provide valuable context, understanding the intricacies of your specific market is crucial for making sound investment decisions. Here are some actionable steps you can take:

  • Deep Dive into Local Numbers: Don't just rely on national headlines. Research permit issuance, housing starts, and completion rates in your target market. This will give you a clearer picture of the local supply-and-demand dynamics. Look for trends that may differ from the national data. For example, while single-family starts dipped slightly nationally, they could be booming in your specific area.
  • Connect with Local Experts: Build relationships with real estate agents and property managers in your area. They can provide valuable insights on local market trends, rental rates, and potential investment opportunities. They can also offer guidance on specific neighborhoods that may be poised for growth or areas where overbuilding could lead to a dip in rental income.
  • Monitor Completion Rates Closely: The significant rise in completions observed nationally is a trend worth keeping an eye on at the local level. An increase in completions in your area could signal a shift in the market balance, potentially affecting everything from rental rates to resale values. By staying informed and keeping a pulse on these trends, you'll be better positioned to make strategic investment decisions.

Remember, knowledge is power in the real estate market. By following these trends and understanding the nuances of your local market, you will be well-equipped to navigate this ever-changing landscape and capitalize on potential opportunities. Here are some potential scenarios based on the April data:

  • Scenario 1: Inventory Relief and Price Stabilization

If the national trend of high completions continues, it could lead to a gradual increase in housing inventory, particularly for single-family homes. This could take some pressure off home prices, offering a window of opportunity for first-time homebuyers who have been shut out due to high prices and bidding wars. However, it's important to remember that interest rates are still a significant factor, and affordability will remain a key concern.

  • Scenario 2: Continued Tight Market with Regional Variations

While completions are rising nationally, regional variations are likely to persist. Certain areas with strong job markets and limited new construction may continue to experience a seller's market with tight inventory and rising prices. In these areas, investors could focus on multi-unit properties or consider alternative strategies like house hacking (living in a portion of a multi-unit property and renting out the remaining units) to maximize their returns.

  • Scenario 3: Builder Confidence Rebounds

If economic indicators improve and interest rates stabilize, builder confidence could rebound. This could lead to an increase in building permits and new construction starts, potentially replenishing the national housing stock in the long term. Investors who are comfortable with a longer-term perspective could consider investing in pre-construction projects or land development opportunities in anticipation of future market growth.

Remember, these are just a few possibilities, and the real estate market is complex and constantly evolving. By staying informed, adaptable, and focused on your long-term investment goals, you can make informed decisions and position yourself for success in any market condition.

ALSO READ:

New Housing Construction Trends & Forecast for 2024 

Luxury Homes: Portland is Now America’s Hottest Luxury Market

by

Forget just lobster rolls, Portland, Maine is reeling in a different kind of catch: luxury homebuyers. According to the latest Wall Street Journal/Realtor.com Housing Market Ranking, Portland has snagged the top spot for the third quarter in a row, making it the hottest destination in the US for high-end living.

According to Hannah Jones, a senior economic research analyst at Realtor.com, Portland's consistent dominance in luxury housing rankings signifies more than just statistical prowess. It reflects the sustained appeal of the city among discerning buyers, drawn not only by its robust economy and housing market but also by its array of amenities and lifestyle offerings.

The quarterly index, which evaluates various metrics including housing market data, economic vitality, and lifestyle factors, identifies Portland as a prime location for those seeking high-end properties with the potential for future appreciation. This recognition positions Portland as a top contender for individuals considering upscale home purchases, whether for personal residence or investment purposes.

Booming Luxury: Top 10 U.S. Markets on the Rise

  1. Portland, Maine: New England charm meets modern luxury in this coastal gem.
  2. Nashville, Tennessee: Music City's allure extends to upscale living with a Southern flair.
  3. St. Louis, Missouri/Illinois: Gateway to luxury? St. Louis offers surprising sophistication.
  4. San Diego, California: Sun-drenched California living meets high-end amenities.
  5. Atlanta, Georgia: Southern metropolis booms with a vibrant luxury market.
  6. Detroit, Michigan: Motor City revving up with a resurgence of luxury living.
  7. Salt Lake City, Utah: Mountain majesty meets modern luxury living.
  8. Boulder, Colorado: Outdoor paradise attracts discerning luxury homebuyers.
  9. Santa Barbara, California: California coastal living redefined by luxury estates.
  10. Minneapolis-St. Paul, Minnesota/Wisconsin: Twin Cities offer a unique blend of urban luxury and natural beauty.

What Sets Portland Apart

Portland's allure extends far beyond its picturesque coastal charm. Alexa Oestreicher, a Portland-based agent with Legacy Properties Sotheby's International Realty, emphasizes the city's multifaceted appeal, citing its diverse cultural scene, world-class healthcare facilities, renowned educational institutions, vibrant culinary landscape, abundant natural resources, and tight-knit community.

Oestreicher aptly describes Portland as a treasure trove of experiences, where every corner offers something new to explore. From arts and culture to outdoor adventures, the city caters to a wide range of interests, making it an ideal destination for those seeking a rich and fulfilling lifestyle.

Portland's Rising Luxury Market

One of the most compelling aspects of Portland's real estate landscape is its remarkable growth in luxury property values. Over the past year, the median luxury listing price in Portland has surged by an impressive 22%, reaching $1.7 million in the first quarter of 2024, according to the ranking.

Despite this significant appreciation, Portland's luxury market remains comparatively affordable, especially for buyers migrating from high-priced regions like Boston, New York, and California. Gregg Caporossi, an agent with Portland's Town & Wharf Real Estate, notes that many incoming residents are drawn to Portland's favorable cost of living and emphasis on work-life balance.

Appeal to Out-of-State Buyers

Portland's allure transcends state borders, attracting luxury buyers from various parts of the country. While New Hampshire and Massachusetts serve as primary sources of migration into Portland, affluent individuals from California, Florida, and beyond are also gravitating towards the city's real estate market.

Caporossi highlights the common thread among these buyers—a desire for a higher quality of life. Many individuals who have accumulated wealth in major metropolitan areas are now seeking refuge in Portland, drawn by fond memories of past experiences in the state, such as vacations, summer camps, or college years.

Impact of Remote Work on Migration

The ability to work remotely, spurred by the pandemic, has facilitated a significant influx of individuals into Portland. Alexa Oestreicher highlights how this newfound flexibility has empowered clients to embrace a lifestyle that balances professional commitments with personal well-being. The allure of Portland's vibrant community, coupled with the opportunity for more quality time with family, has prompted many to relocate, often bringing along friends and extended family members, including grandparents eager to be closer to their loved ones.

Oestreicher emphasizes the practicality of remote work in Portland, where clients enjoy the flexibility of frequent travel without compromising their careers or family life. The city's accessibility via various modes of transportation, from trains to planes, makes it a convenient hub for professionals seeking to strike a harmonious balance between work and leisure.

Climate Considerations

In a notable shift, the latest iteration of the quarterly ranking incorporates climate data to assess the resilience of luxury markets. According to Hannah Jones, this addition underscores the superior performance of top luxury markets in mitigating climate risks. Portland, characterized by its low climate risk profile, offers buyers a sense of security against potential environmental hazards, including extreme heat, wind, air quality issues, floods, and wildfires.

While Portland boasts clean air, water, and overall quality of life, Oestreicher acknowledges the local impact of climate change, particularly evident in the warming of Casco Bay and occasional flooding events. Despite these challenges, she remains optimistic about Portland's ability to adapt and implement measures to safeguard its coastal areas.

Market Dynamics

Portland's real estate market remains robust, albeit experiencing a slower pace of growth compared to previous years. Oestreicher notes a slight deceleration in market activity, attributed in part to unmet expectations regarding interest rate drops. However, she observes a positive shift in competition dynamics, with fewer offers per property and a resurgence of home inspections, indicative of a healthier market equilibrium.

While still favoring sellers, Portland's market exhibits signs of moderation, signaling a more balanced environment for buyers. Despite a shortage of inventory, Gregg Caporossi expresses optimism regarding future price trends, citing factors such as limited new construction and sustained demand driving upward pressure on home prices in Maine.

Looking ahead, Caporossi maintains a bullish outlook on Portland's real estate landscape, confident that the city's enduring appeal and structural factors will continue to underpin its growth trajectory.

Summary: As Portland, Maine, continues to reign as the top luxury destination in the United States, its appeal only grows stronger with each passing quarter. With a winning combination of economic vitality, cultural richness, and natural beauty, Portland stands as a beacon for those in search of a sophisticated yet fulfilling lifestyle.

Whether you're drawn to its charming waterfront, thriving arts scene, or welcoming community, Portland offers an unmatched opportunity to live life to the fullest amidst unparalleled luxury and comfort.

ALSO READ:

Luxury Homes Are Booming in These 10 Unexpected Cities

Housing Market Trends: 90% of Metros See Price Rise in 2024

by

The US housing market continues to defy expectations in 2024. Data from the National Association of Realtors (NAR) reveals a surprising trend: over 90% of metro areas across the country experienced rising home prices in the first quarter, despite persistently high mortgage rates that currently range between 6.6% and 7%. This upward trend is cause for both optimism and cautious analysis.

While a national rise might be anticipated, the specific locations witnessing the most dramatic increases are unexpected. Six out of the top 10 metro areas with the highest year-over-year growth are in Illinois, a state not typically associated with soaring housing prices. Fond du Lac, Wisconsin takes the crown with a remarkable 23.7% increase, followed by Kankakee, Rockford, Champaign-Urbana (all in Illinois), and Johnson City, Tennessee.

Experts like NAR Chief Economist Lawrence Yun attribute this phenomenon to a classic economic principle: “Insufficient housing supply not meeting the full demand.” Low inventory levels are creating bidding wars and driving prices up in these areas. This trend highlights a nationwide issue – a lack of new construction in many regions has created a seller's market, where buyers compete for a limited number of available homes, pushing prices ever higher.

Sure, here's a table representation of the data:

Rank Metro Area Price Appreciation
1. Fond du Lac, Wis. 23.7%
2. Kankakee, Ill. 22.0%
3. Rockford, Ill. 20.1%
4. Champaign-Urbana, Ill. 20.0%
5. Johnson City, Tenn. 19.3%
6. Racine, Wis. 19.0%
7. Newark, N.J.-Pa. 18.8%
8. Bloomington, Ill. 18.5%
9. New York-Jersey City-White Plains, N.Y.-N.J. 18.4%
10. Cumberland, Md.-W.Va. 18.2%

Million Dollar Dreams and Geographic Disparity:

The trend extends beyond affordability. A February 2024 report by Zillow revealed a significant increase in the number of “million-dollar cities,” where the average home value is at least $1 million. This number jumped from 491 in 2023 to 550 in 2024, indicating a growing segment of the market where luxury homes are becoming the norm.

Interestingly, California, which experienced a housing market dip in 2023, is now experiencing a strong rebound. Eight out of the top 10 most expensive housing markets are located in the Golden State, with San Jose leading the pack at a median price of $1.84 million.

Experts believe this resurgence is due to buyers viewing the previous price drops as a second-chance opportunity to enter the California market. This geographic disparity highlights the uneven recovery across the US housing market. While some regions are experiencing explosive growth, others may see more modest increases or even stagnation.

A Look Ahead: Balancing Forces and Long-Term Considerations

The future trajectory of the US housing market remains to be seen. While high demand continues to push prices upwards, rising mortgage rates could eventually dampen buyer enthusiasm. Additionally, the uneven geographic distribution of price increases widens the affordability gap in certain regions.

It will be interesting to see how these opposing forces play out in the coming months. Will rising rates cool the market, or will the supply shortage continue to propel prices forward? Only time will tell how this dynamic market unfolds.

Looking beyond the immediate future, some analysts caution that the current market conditions bear similarities to the housing bubble that burst in 2008. Stricter lending regulations put in place after the crisis have helped prevent a similar scenario, but affordability concerns are rising, particularly for first-time homebuyers.

Whether the market can sustain its current pace of growth or will experience a correction remains to be seen. Close monitoring of economic indicators, mortgage rates, and new construction data will be crucial in understanding the long-term health of the US housing market.

Mortgage Rates HIT NEW LOW: Predictions & What it Means for You

by

Homebuyers can rejoice! On Wednesday, 30-year fixed mortgage rates dipped below the psychologically significant 7% threshold, settling at 6.84% – the most attractive rate since late March according to a report from Investopedia. This marks a welcome decline, especially considering the 5-month high of 7.37% witnessed in late April.

30-Year Mortgage Rates Fall Below 7% for the First Time in Weeks

A Breakdown of the Rate Shift:

The recent decrease extends to a variety of loan types, offering more affordable options for borrowers with different needs and preferences. Let's delve deeper:

  • New Purchase Rates: Across the board, most new purchase loan types experienced a welcome decline in rates on Wednesday. The flagship 30-year fixed rate for new home purchases enjoyed a significant 16 basis point drop, reaching its lowest point since March 29th. This translates to potentially lower monthly payments for borrowers compared to what they would have qualified for just a few weeks ago. For example, on a 300,000 dollar loan, a 16 basis point reduction in interest rate translates to a monthly savings of roughly $48.Fans of shorter loan terms with lower overall interest payments were also treated to some good news. 15-year fixed rates for new purchases fell to 6.01%, marking their most affordable level since late March. This option is ideal for borrowers who prioritize paying off their mortgage faster and are comfortable with slightly higher monthly payments.
  • Refinance Rates: While not experiencing as dramatic a decline as purchase rates, refinance rates also witnessed some movement. The average 30-year refinance rate dipped 2 basis points. This slight decrease may not incentivize all existing homeowners to refinance, but it could be attractive for those who locked in rates at or above the current 6.84% mark. The gap between purchase and refinance rates for the same term widened to 55 basis points. This could be a factor for homeowners considering whether to refinance or wait to purchase a new property.

Beyond the Averages: Individualized Rates and Shopping Around

It's important to remember that these figures represent national averages provided by Investopedia through the Zillow Mortgage API. Your individual rate will ultimately depend on your creditworthiness, loan amount, and down payment size. A higher credit score, larger down payment, and smaller loan amount will generally translate to a more favorable interest rate.

Therefore, even though average rates are down, it's crucial to shop around and compare quotes from multiple lenders to secure the best possible deal. Don't be afraid to negotiate – a little legwork can save you thousands of dollars over the life of your loan.

What Lies Ahead for Mortgage Rates?

Experts are cautiously optimistic about the future of mortgage rates but acknowledge lingering uncertainties. Here are some key factors to consider:

  • Federal Reserve Policy: The Federal Reserve's actions significantly impact mortgage rate fluctuations. The Fed has maintained steady rates since July 2023 after a period of aggressive hikes aimed at curbing inflation. While inflation has shown signs of easing, it remains above the Fed's target level. Until the central bank is confident inflation is under control, they are unlikely to cut rates, which could prevent mortgage rates from dropping substantially.
  • Market Predictions: While the exact direction of mortgage rates is uncertain, some housing authorities and economic analysts offer forecasts based on their understanding of current trends. For instance, Fannie Mae, one of the largest government-sponsored enterprises in the U.S. housing market, predicts an average 30-year fixed rate of 6.4% by year-end (Forbes). However, these predictions should be viewed with caution, as economic factors can change rapidly. The war in Ukraine, for example, could disrupt global energy markets and lead to unforeseen inflationary pressures. Similarly, unexpected shifts in consumer spending or business investment could alter the Federal Reserve's monetary policy calculations, impacting mortgage rates.

Additional Tips for Navigating the Mortgage Market:

Stay Informed: Keep an eye on economic news and housing market trends to get a sense of how mortgage rates might fluctuate. Financial news websites and publications from reputable organizations like the National Association of Realtors (NAR) or the Mortgage Bankers Association (MBA) can be a good source of information.

Get Pre-Approved: Securing a pre-approval from a lender will give you a clearer picture of your borrowing power and budget, allowing you to act quickly when you find the right house. Pre-approval also demonstrates to sellers that you are a serious buyer.

Adjustable-Rate Mortgages (ARMs) as an Option: Adjustable-Rate Mortgages (ARMs) are another option to consider, especially for borrowers who anticipate staying in their home for a shorter period – typically 5 to 10 years.

ARMs offer an initial interest rate that is lower than the prevailing fixed rate for the same term. However, after the introductory period (usually 3, 5, 7, or 10 years), the interest rate can adjust periodically (often annually) based on a financial index, typically the prime rate or the yield on Treasury securities. This means that your monthly payment could go up or down depending on the index movements.

Pros and Cons of ARMs

  • Potentially Lower Initial Rate: If you plan to sell your home before the introductory fixed-rate period ends, an ARM can save you money on monthly payments upfront.
  • Potential for Higher Payments Later: If interest rates rise after the introductory period, your monthly payments on an ARM could become significantly more expensive.
  • Interest Rate Uncertainty: The unpredictable nature of future interest rates can make it difficult to budget for your monthly housing costs over the long term with an ARM.

Bottom Line: The recent dip in mortgage rates presents a welcome window of opportunity for homebuyers. While experts remain cautious about the long-term trajectory of rates due to lingering economic uncertainties, the current climate offers a more affordable borrowing environment compared to a few months ago.

By carefully considering your financial goals, preferred loan term, and risk tolerance, you can select the right mortgage product that aligns with your long-term plans. Remember to shop around for the best rates, and don't hesitate to seek professional guidance from a mortgage broker or financial advisor to navigate the complexities of the home buying process.

ALSO READ:

Mortgage Rate Predictions for Next 3 Years: Double Digit Rise

Mortgage Rate Predictions for the Next 2 Months

Mortgage Rate Predictions for Next 5 Years

Mortgage Rate Predictions for Next 2 Years

Mortgage Rates Prediction: Freddie Mac Sees Elevated Rates in 2024

by

Mortgage rates to stay high in 2024, predicts Freddie Mac. But will strong demand overcome affordability challenges? Let's explore what this means for homebuyers. Freddie Mac, a leading provider of mortgage financing in the U.S., reports a slowdown in the housing market attributed to rising mortgage rates.

According to Freddie Mac's Primary Mortgage Market Survey®, rates climbed in April, averaging 6.99% for the month and ending at 7.17%. This increase led to a significant decrease in overall mortgage activity, down 1.8% month-over-month and 10.4% year-over-year. Both refinance applications, fueled by historically low rates in previous years, and purchase applications for new homes saw a decline.

Mortgage Rate Outlook for 2024

“Mortgage rates trending higher have unfortunately priced out many potential homebuyers,” said Freddie Mac's Chief Economist, Sam Khater, in a previous press release [Freddie Mac Mortgage Rates Trending Lower, April 6, 2023]. “Those in the market are facing a number of challenges, not the least of which is the low inventory of homes for sale, especially for aspiring first-time homebuyers.”

Beyond Mortgage Rates: Tight Inventory Persists as a Hurdle

While rising mortgage rates are a significant factor impacting affordability, Freddie Mac also highlights the ongoing issue of limited housing inventory. The low supply of existing homes for sale continues to be a barrier to homeownership, especially for first-time buyers. This tight supply, coupled with strong demographic trends driving demand, has put upward pressure on house prices, further straining affordability for some.

Homeownership Rate Dips, Reflecting Market Challenges

Reflecting the challenges in the market, Freddie Mac reports a slight decrease in the homeownership rate in the first quarter of 2024 compared to previous quarters. This suggests that a smaller share of the population is achieving homeownership, potentially due to affordability constraints.

Outlook for 2024

Looking ahead, Freddie Mac's baseline scenario predicts that mortgage rates will remain elevated for most of 2024. This is likely to result in a modest increase in home sales compared to 2023, but high interest rates may continue to price out some potential buyers. However, Freddie Mac also acknowledges the presence of favorable demographics, particularly among millennials entering prime first-time homebuyer age, which could help sustain demand despite higher rates.

Mortgage Origination Market: Mixed Signals Amidst High Prices

The outlook for the mortgage origination market is mixed. While high home prices could lead to modest growth in overall origination volume due to larger loan amounts, limited inventory and high rates could restrict the number of purchase loans originated. Refinance activity is also expected to decline further as homeowners have already locked in lower rates in previous years.

Inflation Risks: A Potential Double-Edged Sword

A key risk identified by Freddie Mac is the potential for continued inflation, particularly in the housing sector. Persistent inflation could keep interest rates high, negatively impacting economic growth and consumer spending, further dampening housing demand. However, on the other hand, continued inflation could also lead to an increase in home valuations, potentially benefiting existing homeowners.

A Market in Transition: Potential Silver Linings

The housing market is currently navigating a period of transition. Rising mortgage rates and tight inventory are presenting headwinds for some potential buyers. However, Freddie Mac acknowledges the presence of underlying strength in housing demand, fueled by demographics. Additionally, new home construction, though down slightly month-over-month in March, has shown resilience compared to existing home sales. This suggests that builders may be anticipating future demand and starting to address the inventory shortage.

Room for Optimism: Addressing Inventory and Affordability

As the market adjusts to the new interest rate environment, it will be crucial to monitor factors like inflation and inventory levels to understand the long-term direction of the housing market. Freddie Mac also emphasizes the need for additional housing stock to bring vacancy rates in line with historical averages and alleviate pressure on housing affordability. Addressing the supply side of the equation will be essential for a healthy and sustainable housing market moving forward.

Furthermore, Freddie Mac can play a significant role in supporting a stable housing market through its mission. By providing liquidity and stability to the mortgage market, Freddie Mac can help ensure that financing remains available for creditworthy borrowers, even during periods of economic uncertainty. Additionally, Freddie Mac's advocacy efforts can focus on policies that promote affordable housing options and encourage the development of new housing units.

RELATED POSTS:

Mortgage Rates Predictions 2024: Will Rates Go Down?

Mortgage Rate Predictions for Next 3 Years: Double Digit Rise

Mortgage Rate Predictions for Next 5 Years

Mortgage Rate Predictions for the Next 2 Months

2024 Mortgage Rate Predictions: Will Rates Drop Below 7%?

Mortgage Rates HIT NEW LOW: Predictions & What it Means for You

Mortgage Rate Predictions for Next Month: June 2024

by

For homebuyers in June 2024, the predictions of mortgage rates loom large. After a period of decline in early 2024, rates have seen a slight uptick in May, leaving many wondering what June holds. While the record lows of 2021 and 2022 are likely a thing of the past, some experts predict a continuation of the downward trend that began in late 2023. Let's explore some expert predictions for mortgage rates in June 2024.

The beginning of May saw the average 30-year fixed mortgage rate rise to 7.22%, marking its highest level since November, as reported by Freddie Mac. This increase is part of a trend that has seen rates surpass 7% in mid-April for the first time this year. Despite this uptick, experts maintain a hopeful outlook for a gradual decrease in mortgage rates throughout 2024.

Mortgage Rate Predictions for June 2024

For June 2024, the predictions indicate a range of possibilities:

  • Maximum Interest Rate: 7.80% – This represents the highest end of the projected range. It's unlikely, but possible, to encounter rates this high in June.
  • Minimum Interest Rate: 7.34% – This signifies the most optimistic scenario for June. If economic conditions improve significantly, rates could dip this low.
  • Average Interest Rate: 7.59% – This reflects the most commonly anticipated rate for a 30-year fixed mortgage in June.
  • Forecasted Rate at Month End: 7.57% – This suggests a slight decrease in rates by the end of June compared to the beginning. However, this is just a prediction, and the actual rate could be higher or lower.

It's crucial to remember that these are just predictions, and the actual rates in June could deviate from this range. Economic data releases throughout June, such as inflation reports and employment numbers, can significantly impact mortgage rates. Positive data could push rates up, while negative data could lead to a decrease. Also, individual lenders may offer slightly different rates based on their own internal policies and risk assessments.

Expert Predictions for 2024

A variety of forecasts from reputable sources provide insights into the expected mortgage rates trends in 2024:

  • Freddie Mac predicts that mortgage rates will remain above 6.5% through the second quarter.
  • Fannie Mae's Housing Forecast revised its mortgage rate forecast slightly downward, now expecting the 30-year fixed-rate mortgage to average 6.6% in 2024, with a further decrease to an average of 6.1% in 2025.
  • The National Association of Realtors' Chief Economist, Lawrence Yun, suggests that rates will likely hover in the 6% to 7% range for most of the year due to high budget deficits and inflation metrics above the comfort level.
  • The Mortgage Bankers Association (MBA) forecasts the 30-year fixed-rate mortgage to average 6.7% in Q2 and to end 2024 at 6.4%.
  • Bank of America anticipates the first rate cut in December, with a cautious optimism that rates will drop below 7% in the coming months.
  • Bright MLS forecasts predict rates to hit 6.2% by the fourth quarter.
  • KPMG Economics warns of stubborn inflationary pressures, suggesting fewer rate cuts this year and a possibility of rates once again crossing the 7% threshold.

While the predictions provide a general direction, the actual rates can vary based on a multitude of factors. For those looking to navigate the housing market, staying updated with the latest economic trends and expert analyses is essential. As we move closer to June 2024, monitoring these predictions and preparing for potential rate changes will be key to making strategic mortgage decisions.

ALSO READ:

Mortgage Rate Predictions for Next 3 Years: Double Digit Rise

Mortgage Rate Predictions for Next 5 Years

Mortgage Rate Predictions for Next 2 Years

Home Prices Hit Record Highs in April 2024: Trends & Forecast

by

The housing market in the United States is witnessing unprecedented shifts, with the median home price soaring to an all-time high of $434,000 in April, according to a recent report by Redfin. Despite the slowdown in the housing market compared to the frenzied activity during the pandemic, prices continue their upward trajectory due to a fundamental imbalance between supply and demand.

The supply side of the equation is notably constrained, with insufficient inventory to meet the burgeoning demand from eager homebuyers. In April, new listings saw a modest increase of 1.7% from the previous month on a seasonally adjusted basis, accompanied by a notable 10.8% year-over-year rise.

However, this surge still falls short, lingering approximately 20% below pre-pandemic levels, primarily because many homeowners are reluctant to sell, buoyed by the allure of historically low mortgage rates secured during the pandemic.

It's essential to recognize the context of last April, when new listings plunged to record lows, setting the stage for the significant year-over-year increase observed presently.

Here are some key takeaways:

  • The median sale price increased by 14.0% year-over-year to $433,558.
  • Homes sales have slightly decreased by 1.4% year-over-year.
  • There are 7.5% more active listings compared to last year.
  • Months of supply is at 2.3 which is a seller's market.
  • Homes are selling faster compared to last year as evident by median days on market being 35 days.
  • Share of homes with price drops have increased by 5.6 percentage points year-over-year which indicates a shift in buyer-seller leverage.
  • Average sale-to-list price ratio is still at a high of 99.7%.
  • Share of homes that went under contract within two weeks has decreased by 3 percentage points year-over-year.

Impact on Home Sales and Affordability

While new listings show signs of improvement, home sales experienced marginal fluctuations, with a 0.2% month-over-month change in April on a seasonally adjusted basis, coupled with a 1.4% decline from the previous year.

Homebuyers find themselves grappling with the dual challenge of soaring prices and elevated mortgage rates. The average 30-year-fixed mortgage rate climbed to 6.99% in April, a stark contrast from the historic lows of 2.65% observed during the pandemic era.

However, there is a glimmer of hope on the horizon for prospective buyers. Recent indicators hint at a potential shift, with mortgage rates showing a slight decline in response to the latest inflation report. This development suggests the Federal Reserve may entertain the prospect of interest rate cuts in the coming months—a possibility that was previously deemed unlikely.

Housing Supply and Pricing Strategies

Despite the historically low housing supply, April witnessed a surge in active listings, reaching levels unseen since December 2020. This increase, albeit modest, represents a 0.3% uptick from the previous month and a 7.5% rise from the previous year on a seasonally adjusted basis.

Notably, a significant portion of homes lingered on the market, contributing to the overall inventory. Nearly 43.9% of homes that went under contract in April did so within two weeks of listing, indicating a shift in market dynamics compared to the previous year.

However, the rise in inventory hasn't translated into reduced pricing pressures uniformly across all markets. Approximately 17.6% of homes for sale in April experienced price cuts—a substantial increase from the previous year. This trend underscores the growing willingness among sellers to negotiate, with some offering concessions such as mortgage-rate buydowns to entice hesitant buyers.

Regional Disparities and Seller Optimism

The housing market's performance varies across regions, with some areas witnessing more pronounced cooling effects than others. For instance, markets like Las Vegas, once bustling with activity, are now characterized by increased negotiation flexibility and extended listing durations for properties priced above market value.

In contrast, markets like San Jose, CA, are experiencing heightened competition, with a staggering 75.8% of homes selling above their asking price in April. This trend underscores the regional nuances shaping the current real estate landscape.

Redfin's recent survey of its agents reveals a prevailing sentiment of optimism among sellers, with a majority anticipating a market favorable to their interests in 2024. This sentiment stems from the record-high prices homes are fetching, underscoring the ongoing demand-supply dynamics influencing market behavior.

Metro-Level Highlights: April 2024

Examining the nuances of the housing market at the metro level provides invaluable insights into regional trends and dynamics shaping real estate landscapes across the United States. In April 2024, Redfin's comprehensive analysis of 85 U.S. metro areas with populations exceeding 750,000 revealed a mosaic of contrasting performances, characterized by notable shifts in key metrics.

Price Trends

  • Top Performers: Median sale prices experienced remarkable growth in select metros, with Buffalo, NY leading the pack with a staggering 24.3% year-over-year increase. Other notable gainers include Anaheim, CA (22.8%) and Rochester (15%).
  • Declining Markets: Conversely, only five metros witnessed declines in median sale prices, with San Antonio (-1.6%), Memphis, TN (-0.7%), and Birmingham, AL (-0.7%) experiencing the most significant contractions.

New Listings Dynamics

  • Growth Leaders: San Jose emerged as the frontrunner in new listings growth, soaring by 46.9% year-over-year. Noteworthy increases were also observed in Tacoma, WA (38.3%) and Oakland (38%).
  • Exceptional Decline: Among the metros analyzed, Greensboro, NC stood out as the sole market experiencing a decline in new listings, witnessing a 1.6% decrease compared to the previous year.

Active Listings Fluctuations

  • Rising Markets: Cape Coral, FL, emerged as the leader in active listings growth, surging by 50.6% year-over-year, closely followed by North Port (49.1%) and Fort Lauderdale, FL (42.2%).
  • Declining Trends: Conversely, markets such as Raleigh, NC (-12.3%), New Brunswick, NJ (-8.7%), and Lake County, IL (-7.4%) experienced notable declines in active listings.

Closed Home Sales

  • Growth Hotspots: San Jose led the pack in closed home sales growth, surging by 38.2% year-over-year, followed by San Francisco (30.4%) and Stockton, CA (23.2%).
  • Declining Markets: Conversely, markets like Fresno, CA (-3.5%), Jacksonville, FL (-3%), and Albany, NY (-2.6%) witnessed declines in closed home sales.

Competitive Dynamics and Market Activity

  • Sold Above List Price: The competitive landscape varied across metros, with San Jose leading with 75.8% of homes sold above their final list price, while markets like North Port (6.8%) and West Palm Beach, FL (7.1%) saw comparatively lower shares.
  • Rapid Off-Market Activity: Rochester emerged as the frontrunner in swift market activity, with 84.6% of homes going under contract within two weeks—the highest share among metros analyzed. Conversely, markets like Honolulu (7.4%), Tucson, AZ (16.6%), and Chicago (16.9%) witnessed longer durations before homes went off-market.

In summary, the report by Redfin shows that the U.S. housing market continued to see strong growth in April 2024. However, there are also some signs that the market may be starting to cool down a bit. The number of homes for sale remains below pre-pandemic levels, but sales have flattened out in recent months. Additionally, mortgage rates are beginning to rise, which could put a damper on affordability for some buyers.

Despite these signs, overall conditions still favor sellers. Homes are selling more slowly than they were during the height of the pandemic buying frenzy, but they are still going under contract relatively quickly. In some areas, buyers are even able to negotiate the final sale price down from the asking price.

2025 Housing Predictions Reveal Unexpected Boom Areas

by

As we look towards 2025, the housing market is expected to undergo a series of transformations influenced by various economic factors. Experts predict a stabilization in home prices after the explosive growth seen in previous years, with a trend towards moderate year-over-year appreciation.

In addition to price trends, housing inventory, and demand will also play critical roles. Housing starts are projected to remain weak in 2024 but rebound in 2025, suggesting a delayed response to the market's needs. The rental market is expected to see a supply that outpaces demand, leading to a mild decline in median annual rents.

Competition for homes is likely to persist, spurred by low inventory, which has been a consistent trend in recent years. With that in mind, let's delve into the top 10 housing markets poised for substantial home price increases in 2025, according to the latest data by Zillow.

Top Housing Markets to See the Biggest Price Growth by April 2025

Investing in real estate can be a rewarding venture, especially when targeting markets with significant growth potential. As we look ahead to April 2025, here are the top 10 housing markets poised to experience substantial price growth (Zillow data):

1. Thomaston, Georgia

Thomaston, Georgia, leads the pack with a remarkable 6.4% price appreciation by April 2025. This charming town nestled in the heart of the state offers compelling opportunities for investors seeking high returns.

2. Murray, Kentucky & Toccoa, Georgia

Following closely behind are Murray, Kentucky, and Toccoa, Georgia, with price appreciations of 6% and 4.5% respectively by April 2025. These markets boast affordability and a high quality of life, making them attractive to both investors and residents.

3. Missoula, Montana & Steamboat Springs, Colorado

With their picturesque landscapes, Missoula, Montana, and Steamboat Springs, Colorado, offer investors promising growth opportunities. Both markets are projected to experience price appreciations of 4.4% and 4.3% respectively by April 2025.

4. Cedartown, Georgia & Crossville, Tennessee

Cedartown, Georgia, and Crossville, Tennessee, continue to attract investors with their affordability and strong community ties. By April 2025, these markets are expected to see price appreciations of 4.2% and 4% respectively.

5. Clewiston, Florida & Greeneville, Tennessee

In Florida's heartland, Clewiston presents an opportunity for growth with a 4% price appreciation by April 2025. Meanwhile, Greeneville, Tennessee, boasts a stable housing market with a 3.8% price appreciation, appealing to both investors and homebuyers.

6. Sanford, North Carolina & Knoxville, Tennessee

Sanford, North Carolina, and Knoxville, Tennessee, are thriving communities with diverse economies. By April 2025, these markets are forecasted to see price appreciations of 3.8% and 3.7% respectively, offering stability and growth potential.

7. Brevard, North Carolina & Kinston, North Carolina

Brevard and Kinston, North Carolina, known for their scenic beauty, are projected to experience price appreciations of 3.7% and 3.5% respectively by April 2025. These markets attract buyers seeking affordability and quality of life.

8. Boone, North Carolina & Wauchula, Florida

Boone, North Carolina, and Wauchula, Florida, offer significant growth potential for investors. With price appreciations of 3.5% each by April 2025, these markets present opportunities for those seeking promising returns.

9. Augusta, Maine & Keene, New Hampshire

Augusta, Maine, and Keene, New Hampshire, are emerging markets with price appreciations of 3.4% each by April 2025. These markets offer affordability and potential for growth, making them attractive options for investors.

10. Cornelia, Georgia & Jackson, Wyoming

Cornelia, Georgia, and Jackson, Wyoming, round out our list with price appreciations of 3.4% each by April 2025. These markets may be smaller in size, but they offer promising opportunities for investors seeking to capitalize on the appreciation of property values.

Each of these top housing markets offers unique characteristics and attractions that contribute to their growth potential. Investors should conduct thorough research and consider their investment objectives before diving into these markets. While past performance can provide insights, it's essential to analyze other factors such as market trends, economic indicators, and local regulations to make informed decisions.

Housing Market Trends and Predictions: Freddie Mac Report

by

The allure of homeownership continues to hold strong, especially for millennial first-time buyers. But unlike the red-hot housing market of recent years, navigating the 2024 housing landscape requires a dose of cautious optimism. Freddie Mac's insights offer a valuable roadmap to understanding the current trends and what they might mean for the rest of the year.

Current Housing Market Trends

Following a period of stability in mortgage rates during the initial months of the year, the housing market encountered a slowdown in March. This deceleration was primarily attributed to a rebound in rates, resulting in a 2.7% decrease in total home sales compared to February. Notably, existing home sales bore the brunt of rising rates, experiencing a decline of 4.3% from February and 3.7% from March 2023.

Conversely, new home sales for March exhibited growth, increasing by 8.8% from the previous month to an annualized rate of 693,000 units. This shift towards new home purchases can be attributed to the dwindling supply of existing homes coupled with escalating prices, prompting buyers to explore alternative options.

Despite the overall moderation in the housing construction sector, as indicated by a 14.7% decrease in total starts in March, homebuilder confidence remained steady with a Housing Market Index above the threshold of 50, signifying positive building conditions.

Price Trends and Mortgage Rates

The FHFA Purchase-Only Home Price Index for February reported a 1.2% month-over-month increase, contributing to a robust year-over-year house price growth of 7.0%. This upward trajectory in house prices can be attributed to the persistent imbalance between supply and demand, with limited inventory exerting upward pressure.

Meanwhile, mortgage rates experienced an uptick in April, averaging 6.99% for the month and reaching 7.17% by the month's end. This escalation in rates prompted a decline in mortgage activity, with overall activity down 1.8% month-over-month and 10.4% year-over-year. Refinance activity saw a decrease of 3.3% compared to March, while purchase applications were down 2.7% month-over-month.

Homeownership Trends

The homeownership rate in Q1 2024 witnessed a slight decline to 65.6%, reflecting a marginal decrease from previous quarters. Despite the increase in total housing stock, particularly in occupied units, a notable portion of this growth stemmed from renters rather than homeowners.

Furthermore, vacancy rates, both for rental and homeowner properties, remained low, highlighting the persistent undersupply of housing units. To address this shortage and alleviate pressure on housing markets, the U.S. would need to add an additional 1.5 million vacant homes for sale and rent. However, it's essential to acknowledge that this metric may underestimate the total housing shortage, as it does not account for latent demand and non-market housing vacancies.

Housing Market Predictions for 2024

Despite the strong housing demand, Freddie Mac's housing market outlook is tempered by the persistent lack of inventory available for sale. Under the baseline scenario, there is an anticipation of improvement in home sales compared to 2023, albeit by a narrow margin. This expectation is rooted in the rate lock-in effect, which delays existing homes from entering the market.

However, the outlook on the mortgage origination market is clouded by the expectation of low sale volumes. With the projection of mortgage interest rates remaining higher for an extended period, there is anticipated modest growth in mortgage origination volumes, supported by elevated home prices. Nevertheless, the combination of higher interest rates and limited inventory poses a potential limitation on purchase originations. Furthermore, a decline in refinance origination volumes is expected as homeowners have already taken advantage of low rates, presenting a challenge in the refinance market.

While the outlook remains generally positive, there are emerging risks, particularly stemming from inflation. Over the past year, housing inflation has contributed significantly to overall inflation gains. In an environment characterized by continuous growth in home prices, inflationary pressures may persist for an extended duration.

Under a high inflation scenario, the trajectory of interest rates will likely remain elevated, adversely affecting consumer spending behavior and credit performance. Consequently, this could lead to a slowdown in economic growth, posing challenges to the housing market and broader financial landscape.

How Can You Navigate This Market as a Potential Homebuyer?

Meticulous planning is paramount. Factor in the higher mortgage rates when determining your budget and be realistic about your affordability limits. Consider starting your homeownership journey with a smaller property if affordability is a major concern. Remember, even in a challenging market, good deals can still be found.

Stay patient, collaborate with a qualified realtor to stay informed about new listings, and be prepared to act quickly when the right house comes along. The American dream of homeownership might require a little more effort in 2024, but with a strategic approach and unwavering determination, it's still a dream within reach.

While the housing market may encounter challenges in the near term, including supply constraints and interest rate fluctuations, addressing these issues through strategic interventions and policy measures can pave the way for a more balanced and sustainable market in the future.

Blog Posts

Contact

Norada Real Estate Investments 30251 Golden Lantern, Suite E-261 Laguna Niguel, CA 92677

(949) 218-6668
(800) 611-3060
BBB