Norada Real Estate Investments

Mortgage Rate Predictions 2024: Year End Forecast By Experts

by

For homebuyers who've been waiting for a significant drop in mortgage rates, the news might be a little disappointing. Experts are predicting that rates will likely hold steady above 6% throughout the rest of 2024. This means that the ultra-low rates that hovered around 3% in previous years are unlikely to make a comeback in the near future. The Federal Reserve's interest rate hikes and overall economic conditions are the primary drivers behind this trend.

Mortgage Rate Predictions for the End of 2024

Current Trends and Forecast

Mortgage rates, which had remained historically low during the pandemic, have spiked following the Federal Reserve's aggressive rate-hiking campaign. This increase led home sales to plunge to their lowest level since 1995 last year.

As of July 3, 2024, the 30-year fixed-rate mortgage stands at 6.95 percent according to Freddie Mac, up 0.09 from a week earlier and 0.14 from a year earlier. The 15-year fixed-rate mortgage is at 6.25 percent. Even as rates have come down slightly from the highs seen in April and early May, where average rates hovered over 7 percent, they remain substantially high.

Expert Predictions

Several major institutions have weighed in on their predictions for mortgage rates by the end of 2024:

  • Fannie Mae and the National Association of Realtors (NAR) both expect the average 30-year mortgage rate to modestly lower to around 6.7 percent by the end of the year.
  • The Mortgage Bankers Association is slightly more optimistic, forecasting the rate to be at 6.6 percent.
  • Freddie Mac predicts that the rate will lower to 6.5 percent by the end of 2024.

Freddie Mac's June Economic, Housing, and Mortgage Market Outlook notes that “Mortgage rates have been volatile over the past month, but we expect rates to remain above 6.5 percent through the end of the year.”

The Federal Reserve's Influence

Market observers and homebuyers are eagerly waiting for the Federal Reserve to lower its key interest rate, a move that would eventually lead to lower mortgage rates. However, the Fed has so far been reluctant to make such a move as it remains vigilant about inflation. Lawrence Yun, NAR's chief economist, indicated that “if the spread between the 10-year Treasury bond yield and the 30-year mortgage rate narrows, then mortgage rates can decline even before the Federal Reserve's rate cut.” Yet, he warned that given the uncertain outlook for community and regional banks, the spread might not narrow.

Impact on Homebuyers

The elevated mortgage rates have significantly impacted homebuyers. “The mortgage payment for a typical home today is more than double that of homes purchased before 2020,” Yun noted. Nonetheless, some Americans are still buying homes despite stubbornly high mortgage rates and average home prices close to their pandemic record peaks.

Melissa Cohn, the regional vice president of William Raveis Mortgage, told Newsweek that the buyers in this market are often those who feel they have waited long enough and are ready to make a purchase. “We're just not going to wait anymore,” she said. Cohn also mentioned that some buyers believe that taking advantage of current real estate prices is wise because when mortgage rates eventually come down, real estate prices are likely to rise.

Looking Ahead

As we approach the end of 2024, the mortgage market remains in a state of flux. While forecasts suggest that rates will remain above the 6 percent mark, slight decreases to levels around 6.5 to 6.7 percent are anticipated. Homebuyers need to stay informed, evaluate their financial readiness, and consider both current rates and future market conditions before making decisions.

To sum up, while the forecast for mortgage rates points to a modest decline, it is unlikely that they will drop significantly by the end of 2024. Aspiring homeowners should prepare for a market where mortgage rates remain comparatively high, requiring careful financial planning and strategic decision-making.

ALSO READ:

Two Contrasting Predictions for the Housing Market in 2025

by

The summer sun bakes the U.S. housing market, transitioning from its peak season. While analysts predict some softening in the latter half of 2024, most agree on positive national growth for the year, extending the appreciation streak to 13 years. But what lies ahead in 2025? Here, housing experts offer their diverse insights:

Experts Forecast the 2025 Housing Market

The Bullish Outlook: Goldman Sachs Bets on Supply Constraints

Goldman Sachs, known for its optimistic outlook, predicts a 4.4% national home price increase in 2025. Their reasoning goes beyond just a lack of available housing stock. They acknowledge that rising interest rates could dampen demand from some potential buyers. However, Goldman Sachs believes the supply shortage will be a more powerful force, pushing prices upwards.

Decades of underbuilding have created a structural imbalance in the housing market. The demand for homes, fueled by demographics like millennials entering prime homebuying years, continues to rise.

Meanwhile, new construction has lagged, failing to keep pace with this growing demand. This persistent mismatch between supply and demand is likely to be the dominant factor influencing home prices in 2025, according to Goldman Sachs' forecast.

The Cautious Approach: Moody's Analytics Sees Affordability Hurdles

Moody's Analytics takes a more cautious stance, forecasting a meager 0.3% national price rise for 2025. Their primary concern is affordability. The turbocharged housing market of the pandemic era, fueled by historically low interest rates, drove a significant increase in home prices.

Now, with interest rates rising and inflation on the upswing, many potential buyers are finding themselves priced out. Moody's Analytics believes this affordability squeeze will act as a significant headwind for home price growth in the near future.

First-time homebuyers, a critical segment of the market, will be particularly impacted. Even existing homeowners looking to upgrade may find themselves facing sticker shock and larger monthly mortgage payments. This affordability hurdle is likely to keep a lid on significant price increases in 2025, according to Moody's Analytics.

Beyond National Numbers: Regional Variations Take Center Stage

Experts warn against getting fixated on national forecasts. Regional markets will likely experience a diverse performance.

  • Sunbelt Slowdown: Areas heavily reliant on tourism or facing economic slowdowns, particularly in the Gulf Coast states like Florida and Texas, might see price declines as potential buyers grapple with a combination of factors. Rising interest rates and inflation, coupled with a possible slowdown in tourism or local industries, could make them reconsider their purchasing power. For example, vacation home markets or retirement destinations could be particularly vulnerable if economic conditions worsen.
  • Inventory Squeeze: Markets with limited housing stock, especially in desirable locations with strong job markets and high quality-of-life factors, could experience continued growth fueled by competition among buyers. Think tech hubs like Austin, Seattle, or Denver, where a constant influx of new jobs and a limited supply of housing has driven prices upwards for years. This trend is likely to persist in 2025, potentially outpacing the national average increase.

Emerging Market Movers: Keep an Eye on the Labor Market and Inventory

Two key metrics will be crucial for gauging regional market health:

  • Labor Market: A weakening labor market, particularly in areas heavily reliant on specific industries, could signal a cooling market as potential buyers face job insecurity. This is especially concerning for industries that are sensitive to economic downturns, such as manufacturing or energy. If companies in these sectors start laying off workers, it could lead to a decrease in buyer demand and put downward pressure on home prices. Conversely, a strong labor market with low unemployment rates and rising wages would bolster buyer confidence and potentially lead to continued price growth.
  • Active Inventory: A rise in available homes suggests more options for buyers, potentially leading to price stabilization or even dips in markets with previously low inventory. This can happen for a few reasons. One possibility is that homeowners who previously held off on selling due to a lack of alternatives in the market may decide to list their properties if they see more inventory become available. Additionally, new construction activity could also contribute to a rise in active listings. If the number of homes for sale starts to approach or even exceed buyer demand, it could tip the scales in favor of buyers and lead to a more balanced market, with prices potentially stagnating or even declining in some areas.

The Local Market: Where Insights Become Actionable

National forecasts provide a national temperature, but local markets have their own weather patterns. To make informed decisions in 2025, delve into your specific market. Research local employment rates, new construction activity, and listing inventory levels. These details, coupled with insights from experienced local real estate professionals, will equip you to navigate the 2025 housing market with confidence, whether you're a buyer, seller, or simply curious about the future.

ALSO READ:

Top 10 Housing Market Predictions for the Summer of 2024

by

The summer of 2024 promises to be an interesting one for the housing market. While some key indicators suggest a potential shift, others hint at a continuation of existing trends. Here, we'll explore 10 predictions for the housing market this summer, helping you decide whether it's a good time to buy or sell.

10 Predictions for the Housing Market This Summer (2024)

1. Continued Price Stability

Recent data shows a leveling off of home prices. Realtor.com reports the median listing price remaining flat year-over-year for the third week in a row. This suggests a potential end to the rapid price growth that has characterized the market in recent years. While some modest price increases may still occur, particularly in desirable locations, the breakneck speed of appreciation is likely to slow. This could be a welcome sign for potential buyers who have been priced out of the market in recent years.

2. More Homes on the Market

Good news for buyers! Inventory continues to rise. The latest data shows active inventory up 36.0% year-over-year. This increase in available homes is a significant shift from the seller's market that dominated for much of the past two years.

With more options to choose from, buyers will be able to take their time, compare properties, and negotiate for better deals. This increased selection is likely to put some downward pressure on prices, particularly for homes that may have been overpriced in the earlier period of rapid appreciation.

3. Mortgage Rates May Dip

While mortgage rates remain elevated compared to pre-pandemic levels, there are signs that they may start to come down. Recent weeks have seen a slight decline in rates, driven by promising inflation readings. If this trend continues, it could significantly improve affordability for potential buyers.

A drop in rates, even by a small percentage, could free up additional buying power, making homeownership a more realistic possibility for many. This could lead to a renewed surge in buyer activity, particularly from first-time buyers who have been particularly impacted by high mortgage rates.

4. Sellers May Become More Flexible

With rising inventory and the potential for declining mortgage rates, sellers may need to adjust their strategies. The days of multiple offers and bidding wars above asking price may be coming to an end. As the market shifts towards a more balanced state, sellers may need to be more flexible on price and negotiation.

This could involve being more open to contingencies, offering incentives to buyers, or considering lower offers. For buyers who have been discouraged by the intense competition of the seller's market, this newfound flexibility could present a significant opportunity.

5. Regional Variations Will Persist

The housing market is not a monolith. Trends will continue to vary significantly depending on location. While some areas may experience a slowdown in price growth or even price declines, others, particularly those with strong job markets and limited inventory, may see continued price appreciation.

It's crucial for both buyers and sellers to consider local market conditions before making any decisions. Researching recent sales data, consulting with a local realtor, and understanding the economic outlook for your specific area will be essential for navigating the summer market effectively.

6. Time on Market May Increase

With more homes available and potentially more selective buyers due to lingering affordability concerns, the time it takes to sell a house may increase this summer. This is a shift from the fast-paced market of recent years, where homes often sold within days of listing.

Sellers who are unrealistic about pricing or inflexible in negotiations may find their properties lingering on the market for longer periods. However, for buyers who are patient and willing to do their research, this extended time on the market could present opportunities to find good deals and negotiate favorable terms.

7. First-Time Buyers May Have More Opportunities

The combination of rising inventory, potentially declining mortgage rates, and a more balanced market could create a window of opportunity for first-time buyers this summer. While affordability remains a challenge, an easing of competition and a potential increase in buying power could make homeownership a more attainable goal for many.

However, first-time buyers should still be prepared to act quickly on properties that meet their needs and budget. Carefully considering their financial situation, getting pre-approved for a mortgage, and working with a qualified real estate agent will be crucial for success in this evolving market.

8. Investors May Take a Backseat

With declining returns due to rising property values and potentially increasing mortgage rates, investor activity in the housing market may cool off this summer. This could be a positive development for first-time buyers who have faced stiff competition from investors willing to pay above the asking price. A decrease in investor activity could contribute to a more stable market and potentially lead to more favorable pricing for owner-occupants.

9. New Construction May Slow

The combined effect of rising interest rates and a potential softening of demand could lead to a slowdown in new construction this summer. Builders may become more cautious about starting new projects, particularly in areas with already high inventory levels. This could further tighten supply in the long term, especially in desirable locations with limited existing housing stock. However, in the short term, a slowdown in new construction could help to stabilize inventory levels and prevent a glut of houses on the market.

10. The Market Remains Dynamic

The housing market is constantly evolving, and the predictions outlined here should be viewed as possibilities, not certainties. Economic factors, government policies, and unforeseen events can all impact market conditions. For both buyers and sellers, staying informed about the latest trends and consulting with qualified professionals will be essential for making sound decisions in this dynamic market environment.

Overall Picture and Takeaway

So, to buy or sell this summer? The answer depends on your individual circumstances and priorities.

For buyers, the summer of 2024 presents a potentially more favorable market compared to recent years. Rising inventory, a potential dip in mortgage rates, and a shift towards a more balanced market could all create opportunities. However, affordability remains a concern, and regional variations will be significant. Careful research, sound financial planning, and working with a realtor are key to navigating this evolving market.

For sellers, the days of bidding wars and instant offers may be over. Adjusting pricing strategies, being flexible on negotiations, and considering market conditions are crucial for successful sales this summer.

The overall takeaway? The housing market this summer is likely to be characterized by greater stability compared to the recent period of rapid price growth. While some uncertainties remain, both buyers and sellers can find opportunities by staying informed, adapting their strategies, and making well-considered decisions based on their individual needs.

ALSO READ:

Housing Market Trends 2024: Home Price Reaches an All-time High

by

The housing market has experienced a remarkable trend recently, with the median home sale price reaching new heights for the ninth consecutive week. This impressive growth, driven by various factors, provides a complex yet fascinating snapshot of the current state of the real estate market. Here are the latest trends.

Current Trends in Home-Sale Prices

According to Redfin, as of the four weeks ending July 7, the median U.S. home-sale price reached an all-time high of $397,482, marking a 4.7% increase compared to the previous year. This surge represents the most significant growth in over four months. Despite elevated mortgage rates suppressing homebuying demand, sale prices have remained persistently high. The market's dynamics have led to pending home sales dropping by 3.5% year over year and mortgage-purchase applications falling by 13%.

Factors Contributing to High Prices

Several factors contribute to the sustained high prices in the housing market:

  • Low Inventory: Inventory levels have historically been low, which has helped maintain high prices. Although inventory is rising year over year, it remains at a historically low level.
  • Lagging Indicators: Final sale prices often reflect deals made a month or two earlier, indicating that the current high prices are a result of past transactions.
  • Elevated Mortgage Rates: High mortgage rates have decreased homebuying demand, yet prices have stayed high due to limited supply.

Signs of Slowing Price Growth

Despite the recent record highs, there are indications that price growth may soon decelerate:

  • Homes Selling Below List Price: The typical home is selling for 0.4% less than its asking price, a trend not seen since the start of July 2020.
  • Reduced Sales Above Asking Price: Only 32% of homes are selling above their asking price, down from 36% a year ago, the lowest share at this time of year since 2020.
  • Increased Inventory: New listings are up 7.3% year over year, and the total number of homes for sale has increased by 18.3%. More than 60% of these homes have been listed for at least a month without going under contract.

Market Dynamics and Buyer Behavior

Mortgage rates have remained significantly higher than pandemic-era lows for nearly two years, prompting many sellers to list their homes despite the high rates. This increase in inventory has led to homes sitting on the market longer than usual. Buyers have become more selective, often backing out or negotiating prices down for even minor issues. As Julie Zubiate, a Redfin Premier agent in the Bay Area, notes, “Homes are sitting longer than they usually do this time of year, which has led to some—but not all—homes selling for a little bit less.”

Segments Still Thriving

Despite the general trend of homes sitting longer on the market, there is still a segment that is performing exceptionally well. Move-in ready homes with large backyards in desirable school districts continue to attract multiple offers and often sell above the asking price. This indicates that while the overall market may be cooling slightly, certain properties remain highly sought after.

Housing Market Highlights: Four Weeks Ending July 7, 2024

Redfin’s national metrics provide a comprehensive overview of the housing market, including data from over 400 U.S. metro areas. This information is based on homes listed and/or sold during the specified period. Weekly housing-market data goes back to 2015 and is subject to revision. Here are the key highlights for the four weeks ending July 7, 2024:

  • Median Sale Price: The median sale price reached $397,482, marking a 4.7% year-over-year increase. This is an all-time high and the biggest increase in four months.
  • Median Asking Price: The median asking price was $406,000, reflecting a 5.4% year-over-year rise. Despite the increase, this is the lowest level in three months.
  • Median Monthly Mortgage Payment: The median monthly mortgage payment stood at $2,742 with a 6.95% mortgage rate, a 5.3% increase year-over-year. This is $95 below the all-time high set during the four weeks ending April 28.
  • Pending Sales: Pending sales totaled 83,410, which is a 3.5% decrease year-over-year.
  • New Listings: New listings amounted to 93,452, showing a 7.3% increase year-over-year.
  • Active Listings: The number of active listings reached 970,503, an 18.3% year-over-year increase. This is the smallest increase in over two months.
  • Months of Supply: The months of supply was 3.6, up 0.8 points year-over-year. A balanced market typically has 4 to 5 months of supply; thus, the current figure indicates seller’s market conditions.
  • Share of Homes Off Market in Two Weeks: Approximately 41.1% of homes were off the market within two weeks, down from 45% a year ago.
  • Median Days on Market: The median days on market was 32 days, an increase of 4 days year-over-year.
  • Share of Homes Sold Above List Price: Only 31.9% of homes were sold above their list price, down from 36% a year ago.
  • Share of Homes with a Price Drop: The share of homes with a price drop increased by 1.8 points to 6.5%.
  • Average Sale-to-List Price Ratio: The average sale-to-list price ratio was 99.6%, down 0.4 points year-over-year.

Conclusion

The current housing market presents a mixed picture. While home-sale prices have hit record highs for nine consecutive weeks, signs suggest that this trend may not continue indefinitely. Rising inventory, homes selling below list price, and a more selective buyer base indicate potential shifts in the market. However, certain segments, such as move-in ready homes in prime locations, continue to thrive. Sellers need to adapt to these evolving conditions, ensuring their homes are well-prepared, accurately priced, and effectively promoted to attract the right buyers.

ALSO READ:

Housing Market 2024 Booms: Homeowner Equity Surges $1.5 Trillion in Q1

by

The housing market continues to show positive signs! A new report from CoreLogic reveals a significant increase in homeowner equity across the United States in the first quarter of 2024. This positive trend comes amidst rising home prices and offers welcome relief to many homeowners who were previously underwater on their mortgages. Let's dive deeper into the report's findings and explore what they mean for the current housing market.

Homeowner Equity Surges! US Sees $1.5 Trillion Gain in Q1

The CoreLogic Homeowner Equity Insights report is a quarterly publication that covers homeowner equity at the national, state, and metro levels, including negative equity share and average equity gains. This report features an interactive view of the data through digital maps, analyzing CoreLogic homeowner equity data for the first quarter of 2024.

Negative equity, often referred to as being “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. This situation can arise from a decline in home value, an increase in mortgage debt, or both. This data set includes only properties with a mortgage and excludes those owned outright.

Homeowner Equity in Q1 2024

According to CoreLogic's analysis, U.S. homeowners with mortgages (approximately 62% of all properties) experienced an increase in equity totaling $1.5 trillion from the first quarter of 2023, reflecting a 9.6% year-over-year gain. Source: 2016 American Community Survey

Year-Over-Year U.S. Home Equity Changes, Q1 2024

In Q1 2024, the total number of mortgaged residential properties with negative equity decreased by 2.1% from the previous quarter, representing 1 million homes or 1.8% of all mortgaged properties. Year-over-year, negative equity fell by 16.1% from 1.2 million homes or 2.1% of all mortgaged properties in Q1 2023.

Home equity is influenced by changes in home prices. Borrowers near the negative equity threshold (+/- 5%) are likely to move into or out of negative equity as home prices fluctuate.

For instance, a 5% increase in home prices would allow 110,000 homes to regain equity, while a 5% decrease would push 153,000 homes underwater. The CoreLogic HPI Forecast predicts a 3.7% increase in home prices from March 2024 to March 2025.

U.S. Negative Home Equity Changes Year Over Year, Q1 2024

California led the U.S. in annual equity gains for Q1 2024. As one of the most expensive states with high housing demand, California homeowners saw the largest equity gain at $64,000, with those in the Los Angeles metro area netting $72,000 year-over-year.

Significant gains were also seen in the Northeast, including New Jersey ($59,000), which has been in the top three for annual appreciation according to CoreLogic's monthly Home Price Insights report.

National Aggregate Value of Negative Equity: Q1 2024

At the end of Q1 2024, the national aggregate value of negative equity was approximately $321 billion, down $2.8 billion or 1% from Q4 2023, and down $17.6 billion or 5% from Q1 2023. Negative equity peaked at 26% of mortgaged properties in Q4 2009.

Negative Equity Share by U.S. State, Q1 2024

“With home prices continuing to reach new highs, owners are also seeing their equity approach the historic peaks of 2023, close to a total of $305,000 per owner. Importantly, higher prices have also lifted some 190,000 homeowners out of negative equity, leaving only about 1.8% of those with mortgages underwater.

Home equity is key to mortgage holders who have seen other homeownership costs soar, including insurance, taxes and HOA fees, as a source of financial buffer.

Also, low amounts of negative equity are welcomed in markets that have shown price weaknesses this spring, such as Florida (1.1% of homes underwater) and Texas (1.7% of homes underwater) — both of which are below the national rate — as further price declines could drive more homeowners to lose their equity.” – Dr. Selma Hepp, Chief Economist for CoreLogic

National Homeowner Equity

In Q1 2024, the average U.S. homeowner gained approximately $28,000 in equity over the past year. California ($64,000), Massachusetts ($61,000), and New Jersey ($59,000) posted the largest average equity gains. No states experienced annual equity losses.

CoreLogic also provides homeowner equity data at the metropolitan level, depicting changes for ten of the largest cities by housing stock. Negative equity has decreased nationwide, with Las Vegas having the lowest negative equity share at 0.6% of all mortgages. It is followed by LA (0.7%), San Francisco (0.8%), and Miami (0.9%).

National Homeowner Equity
Source: CoreLogic

Summary

CoreLogic began reporting homeowner equity data in Q1 2010, at a time when the equity outlook for homeowners was bleak. Since then, many homes have regained equity, and the outstanding balance on most mortgages is now equal to or less than the loan balance.

ALSO READ:

Experts Predict Housing Market Recovery in Late 2024 through 2025

by

Housing slump ending soon? Experts say prices stabilize & sales rise in late 2024, strong recovery by 2025. Economic and real estate specialists are predicting a housing market recovery beginning in late 2024 and extending through 2025.

This brings positive prospects for plumbing manufacturers, distributors, and construction trades involved in the housing market. The United States is seeing increased population and job growth, shifting demographics, and cooling inflation, all contributing to higher home sales, although some challenges remain in the commercial and multifamily real estate sectors.

Housing Market Recovery Predictions

Job Growth and Housing Demand

Job growth this year has been robust, driving long-term real estate demand. A strong job market typically translates to better wages, leading to increased housing demand. The Bureau of Labor Statistics (BLS) reported an encouraging update in March: employers added 303,000 jobs, surpassing the average monthly gain of 231,000 over the past year.

The BLS also notes that total payroll jobs have increased by 5 million compared to pre-COVID-19 levels. Many workers who have taken new jobs this year are planning significant lifestyle changes, including purchasing a new home or car, according to a ZipRecruiter survey.

Cooling Inflation and Mortgage Rates

As inflation is expected to cool, lower mortgage interest rates over the coming months will help boost existing home sales. The National Association of Realtors (NAR) expects existing home sales to rise because 30-year mortgage rates have likely peaked, and the Fannie Mae Home Purchase Sentiment Index is improving.

The index is above 70 percent after bottoming out at around 57 percent in 2022, according to NAR chief economist Lawrence Yun, Ph.D. In March, he presented a positive real estate outlook at the Plumbing Manufacturers International (PMI) Washington Legislative Forum and Fly-In. In its April housing market forecast, Fannie Mae projected that mortgage rates will drop to 6.4 percent by the end of this year and continue declining through 2025.

Experts believe that stabilizing rent prices will help reduce the Consumer Price Index (CPI); this price relief could enable the Federal Reserve to lower interest rates. Yun noted the CPI fell to 3.1 percent in January, down from its 2022 peak of around 9 percent.

Strong Housing Starts Boost Building-Related Product Sales

Following a recessionary phase that began earlier than the broader economy, the housing market is poised for recovery. Permits for single-family housing starts are rising nationwide, with some states experiencing accelerated growth. NAR expects housing starts to increase by 1.2 percent to 1.43 million in 2024 and by 4.9 percent to 1.5 million in 2025.

New home construction will be especially strong in Texas, Florida, and Indiana, where single-family housing unit permits have risen by 44 percent, 27 percent, and nearly 50 percent, respectively, according to ITR Economics’ Connor Lokar during PMI’s April Market Outlook LIVE presentation. This positive housing trend will lead to increased wholesale volumes and boosted customer orders for plumbing fixtures, fittings, and other construction-related products, he says.

NAR projects that existing home sales will grow by 9 percent to 4.46 million in 2024, and by an additional 13.2 percent to 5.05 million in 2025.

Local governments are getting creative to address the demand for more housing by reconsidering lot size requirements, zoning laws, and other policies. For instance, the Washington Post reports that Sheboygan, Wis., is collaborating with local employers, including PMI member Kohler Co., to build 600 entry-level homes priced between $230,000 and $250,000 to attract more front-line manufacturing workers. The county will also offer downpayment assistance to buyers.

Other cities — such as Portland, Ore.; Austin, Texas; and St. Paul, Minn. — have changed zoning laws to allow building up to four homes on one lot.

Growing Population and Life Changes to Sustain Home Sales

The increasing population and changing life events, such as retirement and job changes, are creating positive shifts in the housing market.

U.S. population growth is on the rise, contributing to pent-up home-selling demand. According to the U.S. Census Bureau’s January estimates, the nation’s population grew by 1.6 million to a total of 334.9 million, reaching its highest level since the pandemic.

Yun highlighted life changes expected over the next two years that will boost total home sales to pre-COVID levels: 7 million births, 3 million marriages, 1.5 million divorces, 7 million Americans turning age 65, 4 million deaths, 5 million new jobs created, and 50 million job switches.

Generational buying habits are also evolving. Millennials have overtaken baby boomers as the largest group of homebuyers at 38 percent, and Gen X buyers are most likely to purchase multigenerational homes at 19 percent, according to the NAR 2024 Home Buyers and Sellers Generational Trends report. Baby boomers remain the largest generation of home sellers at 45 percent.

Millennials are selling because their homes are too small or their family situations have changed, while baby boomers and Silent Generation members (born between 1928 and 1945) are selling to move closer to family and friends or because their homes are too large.

Challenges Still Ahead

Some challenges and concerns remain. Outlooks in the commercial, multifamily, and remodeling sectors are less favorable, especially as the overall economy begins to soften later this year.

Currently at around 3.5 percent, the U.S. inflation rate is unlikely to return to the below 2 percent levels seen before the COVID-19 pandemic, according to Lokar, due to factors embedded in the economy, such as government spending and labor costs. Commercial and nonresidential markets will lag, and multifamily housing demand will decrease in the short term.

Lokar notes a positive outcome from slow economic growth at the end of 2023 and early 2024: less supply chain pressure. While supply chain recovery is creating excess inventory issues, building material and plumbing product retail sales should start to progress in late 2024 with improved housing fundamentals.

After a challenging period of tight housing inventory, high home prices, and elevated mortgage interest rates, it’s encouraging to see rising housing starts and strong job growth. Although the economy may face obstacles, using the forecasts from real estate and financial experts can help us adapt and innovate, as our industry has done for decades.

ALSO READ:

Housing Market Predictions for the Second Half of 2024

by

The housing market has been a whirlwind in recent years, with skyrocketing prices, bidding wars, and historically low mortgage rates. As we head into the second half of 2024, experts offer a mixed outlook, with some predicting a gradual improvement and others remaining cautious. Here's a breakdown of the key factors that will likely shape the market in the coming months:

The Housing Market in the Second Half of 2024: Predictions

1. Inventory on the Rise, But Still Not Enough

Good news for buyers: inventory is finally increasing. Weekly data from Realtor.com shows a 35.5% year-over-year jump in available homes for sale as of June 1st, 2024. This is partly due to a rise in affordable listings, particularly in the South. However, experts like Doug Duncan of Fannie Mae warn that these new listings might not translate to faster sales due to affordability challenges. With overall inventory still significantly below pre-pandemic levels, a true market balance may be a ways off.

2. Mortgage Rates: A Potential Turning Point?

Mortgage rates, a major factor in affordability, have been on a rollercoaster ride. After reaching highs of over 7% in May, there have been recent dips. The Federal Reserve's upcoming meeting in June is being closely watched, with some, like the National Association of Realtors (NAR), predicting a potential rate cut by fall. Even if rates do come down to the projected 6.5% by the end of the year, it may not significantly improve affordability, as rising home prices could offset the benefit.

3. Home Prices: A Cooling Trend, or Not Quite?

While the breakneck pace of price increases seems to have slowed, national home prices haven't softened as drastically as some might have expected. The median sale price is still up over 4% compared to last year. Certain markets, like Austin and San Antonio, have seen price declines, but these were areas with particularly high pandemic-era growth. The vast majority of metro areas are still experiencing price increases, and a national decline seems unlikely.

What Does This Mean for You?

The second half of 2024 could be a time of transition for the housing market. Buyers will likely see more options compared to the previous year, but affordability will likely remain a concern. If you're considering buying a home, stay informed about market trends and mortgage rates. It may be wise to consult a real estate professional to navigate the specific dynamics of your local market.

The Regional Roundup: Boom or Bust in Your Backyard?

The national outlook on housing paints a broad picture, but the reality can differ greatly depending on your location. Here's a closer look at the potential trends in different regions of the United States:

The Sun Belt Sizzles (for Now)

The South continues to be a hotbed of activity, with a significant rise in affordable listings and for-sale inventory. This makes it an attractive option for first-time buyers and those seeking more budget-friendly options. However, keep in mind that even with the recent price dips in some Sun Belt metros, affordability challenges remain due to the substantial growth these areas experienced during the pandemic.

The Slowdown in the West

Markets in the West, once the epicenter of the housing boom, are showing signs of a slowdown. This is particularly true for previously white-hot areas like San Francisco and Seattle, where high mortgage rates and inflated prices are deterring some buyers. While this could present an opportunity for those priced out before, it's crucial to consider the long-term economic outlook of these regions before making a purchase.

The Northeast: A Tale of Two Markets

The Northeastern housing market presents a mixed bag. While coastal cities like New York and Boston might see a cool-down due to high costs, more affordable suburbs and smaller metros could see continued buyer interest. Here, the availability of inventory and job market stability will be key factors influencing market dynamics.

The Midwest: A Pocket of Stability

The Midwest is expected to be a region of relative stability in the second half of 2024. Inventory levels are likely to remain moderate, and price increases are projected to be more muted compared to other regions. This could bode well for both buyers and sellers seeking a more predictable market environment.

Remember, It's Local

While these regional trends offer a helpful starting point, the true story unfolds at the local level. Factors like job growth, local economic conditions, and even specific neighborhood dynamics can significantly impact your market experience. It's important to research your target area and consult with a local real estate agent to get the most accurate picture of what to expect.

Key Considerations for Homebuyers and Sellers

The housing market in the second half of 2024 is likely to be a complex landscape, influenced by a mix of economic factors and local trends. Here are some crucial considerations for both buyers and sellers navigating this dynamic environment:

For Homebuyers:

  • Affordability First: With mortgage rates still hovering above 7% and home prices projected to remain high, prioritize affordability throughout your search. Carefully assess your budget and be prepared to potentially adjust your expectations regarding location, size, or features.
  • Embrace Patience: Don't expect a return to the pre-pandemic frenzy of bidding wars. The market is likely to favor a more measured approach. Be patient, do your research, and avoid rushing into a decision.
  • The Power of Pre-Approval: Getting pre-approved for a mortgage strengthens your offer and demonstrates your seriousness to sellers. Shop around for the best rates and terms to maximize your purchasing power.
  • Consider a Local Real Estate Agent: A knowledgeable real estate agent can be a valuable asset in a complex market. They can guide you through the intricacies of your local market, negotiate on your behalf, and help you find the right property that aligns with your needs and budget.

For Sellers:

  • Pricing Strategy is Key: While the seller's market may be waning, there's still an opportunity to attract buyers. Consider a competitive asking price based on current market trends and recent sales in your neighborhood.
  • Highlight Your Home's Strengths: Emphasize the unique features and benefits of your property that make it stand out in the market. Staging your home and taking high-quality photos can significantly enhance its appeal to potential buyers.
  • Be Flexible: In a more balanced market, some sellers may need to be more flexible with their asking price or closing terms to attract buyers. Be prepared to negotiate and consider offering incentives, if necessary.
  • Market Knowledge is Crucial: Stay informed about current market conditions and buyer trends in your area. Consult with a real estate agent to understand the best strategies for effectively marketing and selling your property.

While the short-term forecast for the housing market paints a picture of gradual change, some unforeseen events or longer-term trends could disrupt the current outlook. Here are a few factors to keep on your radar:

  • Economic Uncertainty: A significant economic downturn or a major shift in employment patterns could significantly impact housing demand and affordability. Staying informed about broader economic trends can help you adjust your housing strategy if necessary.
  • Impact of Climate Change: Climate-related events like extreme weather or rising sea levels could affect the desirability and value of properties in certain locations. It's important to consider these long-term risks when making housing decisions.
  • Policy Changes: Government policies, such as tax breaks for first-time homebuyers or regulations on short-term rentals, can influence market dynamics. Be aware of potential policy shifts that might impact your buying or selling plans.
  • Technological Advancements: Technological innovations in construction materials or financing methods could potentially impact housing affordability or efficiency in the long run. Staying informed about these advancements can help you make future-proof decisions.

Beyond the Immediate Market:

The housing market, while crucial for many, is just one piece of the larger economic puzzle. It's important to consider your housing goals within the context of your long-term financial plans. Faktoren (factors) like your career trajectory, retirement savings, and overall financial health should be factored into your decision-making process.

Conclusion:

The second half of 2024 is likely to be a period of adjustment for the housing market. While some may see this as a time of uncertainty, it can also be an opportunity for both buyers and sellers to approach the market with a more strategic and informed perspective. By staying abreast of market trends, carefully considering your individual needs, and potentially seeking professional guidance, you can navigate this dynamic environment and make sound decisions that align with your long-term goals.

ALSO READ:

How to Get a 3% Mortgage Rate to Slash Your Monthly Payment

by

3% mortgage rate in 2024? Is it possible? Navigating the ever-shifting tides of mortgage rates can feel like an impossible feat. The once-common dream of a coveted 3% interest rate might seem like a shimmering mirage on the horizon. But fear not, aspiring homeowner! With careful planning, strategic maneuvering, and a keen understanding of the current market, this dream can still be realized.

We'll delve into some possible strategies that can unlock the door to that elusive 3% rate, equip you with the knowledge to effectively negotiate mortgage fees, and finally, shed light on the current mortgage rate market as of July 2024.

How to Get a 3% Mortgage Rate in 2024?

Current Mortgage Rate Landscape in 2024

According to Freddie Mac, as of early July 2024, the average 30-year fixed mortgage rate stands at 6.95%. This is significantly higher than the pre-pandemic rates, which hovered around 3-4%.

Freddie Mac Data on Mortgage Rates (as of 07/03/2024)

Metric Value
30-Year Fixed Rate (FRM) 6.95%
1-Week Change 0.09%
1-Year Change 0.14%
4-Week Average 6.91%
52-Week Average 7.02%
52-Week Range 6.6% – 7.79%

The table above shows that the 30-year fixed mortgage rate has varied significantly over the past 52 weeks, reaching a high of 7.79% and a low of 6.6%.

Pathways to a 3% Mortgage Rate

1. Assumable Mortgages

While the average mortgage rate in 2024 might hover around 6-7%, one practical approach to obtaining a 3% mortgage rate is through assumable mortgages. This option depends on whether you can take over a mortgage from a seller who already possesses a low-interest rate loan. Assumable mortgages allow the buyer to assume the current terms of the seller's mortgage, often including the interest rate. This is particularly advantageous if the seller locked in a lower rate before the higher rates of recent years.

What's an Assumable Mortgage?

Imagine inheriting a fantastic benefit – a low interest rate on your mortgage! That's the magic of an assumable mortgage. It allows the buyer (you!) to take over the seller's existing loan, inheriting the original interest rate and terms.

These assumable mortgages are most commonly found with loans insured by the FHA (Federal Housing Administration), backed by the VA (Department of Veterans Affairs), or the USDA (United States Department of Agriculture). Data suggests that a surprising number – roughly 14% of active mortgages – offer assumable rates below 4%.

Let's see how this translates to real savings. Consider a $300,000 loan. With a typical 6.5% interest rate, your monthly payment would be around $2,087. But with a magical 3% assumable rate, that payment plummets to $1,302! That's a cool $785 saved every month – a significant difference that could boost your financial flexibility.

Assumable mortgages often come with another advantage – skipping the appraisal process. Appraisals can cost several hundred dollars, so avoiding this step translates to additional savings for you.

While assumable mortgages exist, they might require some searching. Consider working with a realtor who specializes in finding these unique opportunities. Remember, with a lower interest rate on the table, these properties might attract more competition, so be prepared to act quickly!

Key Benefits:

  • Lower Interest Rates: By assuming a loan, you can take advantage of historically low rates that the seller may have secured.
  • Cost Savings on Initial Fees: Assumable mortgages may reduce some of the costs typically associated with taking out a new mortgage.
  • Possibility of Faster Approval Process: The terms and rates are already established, potentially leading to a quicker approval process.

Eligibility and Types:

  • FHA Loans: Often assumable if the buyer meets the FHA's credit and underwriting requirements.
  • VA Loans: Assumable, especially attractive for veterans and active military personnel, with necessary VA qualifications.
  • USDA Loans: Designed for rural property buyers and are also assumable.

The Process:

  • Prequalification: Gathering financial documents and meeting prequalification requirements.
  • Seller Cooperation: Essential for documentation and lender communications.
  • Application and Credit Review: Submission of the application and verification of financial details.
  • Approval and Transfer: Signing of the assumption agreement and official transfer of the loan.
  • Closing Process: Legal documentation and signing off of the loan transfer.

Challenges:

  • Differential Payment: Covering the gap between the assumed mortgage balance and the current home price.
  • Qualification Requirements: Meeting stringent lender criteria.
  • Seller Liability: Clarify with the lender to ensure the seller is discharged from mortgage liability.

2. Refinancing Strategies

Another strategic method is to explore refinancing options or home buyer programs specifically designed to offer lower interest rates. Although refinancing does come with its own set of fees, the long-term savings from a reduced interest rate could outweigh these initial costs.

Negotiating Mortgage Fees

Effective fee negotiation can significantly reduce your overall loan costs. Here are several tactics to consider:

1. Shop Around

The first step is to compare offers from multiple lenders. Each lender has different terms and rates, and by obtaining multiple quotes, you can leverage these offers to negotiate better terms.

2. Ask for Fee Reductions

Do not hesitate to directly ask for lower fees or discounts. Many lenders are willing to negotiate origination fees, application fees, and even appraisal fees. Experts suggest that simply inquiring about reducing or waiving certain fees can lead to considerable savings.

3. Strengthen Your Borrower Profile

A strong credit score, stable income, and low debt-to-income ratio make you a more attractive borrower. Lenders may be more willing to offer competitive rates and lower fees if you present a lower risk. Maintaining a robust financial profile to enhance your negotiation power.

Understanding the current rate trends is crucial for making informed decisions. As mentioned above, the average interest rate as of early July 2024 is 6.95%. This is a significant increase compared to pre-2021 rates, but there are still strategies available to mitigate high rate impacts.

Experts like Freddie Mac predict that rates may remain relatively high due to ongoing economic factors such as inflation and Federal Reserve policies. However, keeping a close watch on market conditions and professional forecasts can provide opportunities for securing favorable rates.

Conclusion

While a 3% mortgage rate in 2024 may seem challenging to achieve, it is within reach with careful planning and strategic actions. Exploring assumable mortgages, negotiating fees, and maintaining a strong financial profile are key strategies to secure the best possible rates. Stay informed of current trends and leverage the competitive market to your advantage. With the right approach, securing a desirable mortgage rate and reducing associated fees are achievable goals.

ALSO READ:

When is the Next Fed Rate Hike Expected?

by

As we enter July 2024, financial markets are abuzz with speculation about the Federal Reserve's next move on interest rates. While the Fed has maintained interest rates in the recent months, there is increasing curiosity about the timing and scale of the next rate hike. This article delves into current analyses, expert opinions, and key data to forecast the upcoming Federal Reserve rate changes.

When is the Next Fed Rate Hike Expected?

To set the stage, it's crucial to understand the current interest rate environment. As per the latest FOMC (Federal Open Market Committee) meeting held on June 11-12, 2024, the Fed decided to keep the interest rates unchanged within the 5.25% – 5.50% range. This decision was heavily influenced by the ongoing battle against inflation.

Key Highlights from the June FOMC Meeting:

  • Inflation Concerns: Inflation continues to be a primary concern, with the persistent rise in consumer prices.
  • Economic Indicators: Mixed signals from the labor market and GDP growth.

Factors Influencing the Next Rate Hike

Various factors collectively determine the Federal Reserve's decisions on rate hikes. Let's dive into the major elements influencing the Fed's forthcoming actions:

Economic Growth

Economic growth is one of the primary indicators the Fed evaluates. The U.S. economy has shown resilience, but there are signs of slowing growth. The GDP numbers for the second quarter of 2024 will be crucial in this regard. Sustained economic growth typically warrants higher interest rates to prevent inflation from spiraling out of control.

Inflation and Consumer Prices

Inflation remains sticky, despite aggressive rate increases over the past 15 months. The June 2024 CPI (Consumer Price Index) report showcased an annual increase of 3.2%, slightly above the Fed's target of 2%.

Labor Market Trends

The labor market has remained robust, with an unemployment rate hovering around 3.9%. This low unemployment rate suggests that the economy is operating near full capacity, potentially pushing wages—and thus prices—upward.

Market Expectations

Market sentiment is split regarding the timing of the next rate hike. Here are some expert opinions and forecasts:

Diverging Views on Rate Hikes and Cuts

Experts from major financial institutions and analysts have diverse opinions:

  • Deutsche Bank and Goldman Sachs predict another rate hike by the end of Q3 2024, considering the inflation trajectory.
  • Morningstar anticipates a rate cut as early as the July 2024 meeting, expecting the Fed to pivot to stimulate economic growth.

Upcoming FOMC Meeting Schedule

To gain a better understanding of potential rate hikes, it's essential to remain aware of the Fed's meeting calendar. Below is a summary of notable upcoming meetings.

Meeting Date Key Expectations
July 30-31, 2024 Possible rate hike or cut depending on economic data
September 17-18, 2024 Last meeting before Q3 ends, crucial for year-end outlook
November 5-6, 2024 Anticipated to set tone for Q4

The next meeting on July 30-31, 2024, is particularly noteworthy. Market participants are keenly observing this meeting to gauge the Fed's stance on potential rate changes.

Concluding Thoughts

As July 2024 progresses, the crucial factors of inflation, economic growth, and labor market trends will steer the Federal Reserve's decision-making process. The next FOMC meeting at the end of July is poised to be a pivotal moment for markets and the broader economic landscape. Whether the Fed raises rates, maintains the status quo, or even considers a rate cut, it will undoubtedly be a decision reflecting comprehensive economic analysis and strategic foresight.

For further updates, stay tuned to trusted financial news sources and the official Federal Reserve website.

Key Takeaways

  • The Fed has currently kept interest rates steady at 5.25%-5.50%.
  • Key factors influencing the next rate hike include inflation, economic growth, and labor market trends.
  • The upcoming FOMC meeting on July 30-31, 2024 will be critical in determining the course of interest rates for the year.

Understanding these dynamics helps in navigating the financial landscape and making informed investment decisions.

ALSO READ:

Experts Predict What Happens to Mortgage Rates After July Fed Meeting

by

In recent months, homeowners and potential buyers alike have been closely monitoring mortgage rates, which have remained at elevated levels. The question on everyone's mind is whether these rates will start to decline after the Federal Reserve's (Fed) meeting in July. Most probably, mortgage rates likely won't fall after the July Fed meeting due to the Fed's wait-and-see approach to interest rates. Let's delve into the potential outcomes, analyzing past trends, expert opinions, and economic indicators to provide a clear picture of what to expect.

Will Mortgage Rates Fall After the July Fed Meeting?

Current State of Mortgage Rates

Mortgage rates have been on a rollercoaster ride over the past year. Factors contributing to the elevated rates include:

  • Economic Recovery: As the economy recovered from the pandemic-induced slowdown, inflationary pressures pushed interest rates higher.
  • Federal Reserve Policies: The Fed's policies on asset purchases and interest rates have a direct impact on mortgage rates.
  • Global Uncertainties: Geopolitical tensions and global economic conditions have also played a role in keeping rates unpredictable.

According to Freddie Mac, as of early July 2024, the average 30-year fixed mortgage rate stands at 6.95%. This is significantly higher than the pre-pandemic rates, which hovered around 3-4%.

Freddie Mac Data on Mortgage Rates (as of 07/03/2024)

Metric Value
30-Year Fixed Rate (FRM) 6.95%
1-Week Change 0.09%
1-Year Change 0.14%
4-Week Average 6.91%
52-Week Average 7.02%
52-Week Range 6.6% – 7.79%

The table above shows that the 30-year fixed mortgage rate has varied significantly over the past 52 weeks, reaching a high of 7.79% and a low of 6.6%.

Factors Influencing Mortgage Rates

Understanding the various factors that can influence mortgage rates is crucial for predicting future trends:

1. Inflation Trends

  • Rising Inflation: When inflation increases, lenders demand higher interest rates to compensate for the reduced purchasing power of future repayments.
  • Fed's Inflation Target: The Fed aims to keep inflation around 2%. Any deviation from this target can prompt changes in monetary policy.

2. Federal Reserve's Monetary Policy

  • Interest Rates: The Fed's decisions on short-term interest rates can indirectly influence mortgage rates.
  • Quantitative Easing (QE): The unwinding of QE can lead to higher long-term interest rates, impacting mortgages.

3. Labor Market Conditions

  • Employment Rates: A robust labor market can contribute to economic growth and inflation, affecting mortgage rates.
  • Wage Growth: Increased wages can lead to higher spending and inflation, pushing rates upward.

Historical Perspective: Fed Meetings and Mortgage Rates

To gain insight into potential future trends, let's examine past Fed meetings and their impact on mortgage rates:

Fed Meeting Date Fed Policy Decision Subsequent Mortgage Rate Trend
June 2021 No Rate Change Rates remained steady
March 2022 Rate Hike Rates increased
July 2022 Rate Hike Rates increased further
July 2023 Rate Pause Rates slightly decreased
November 2023 Rate Steady at 5.25%-5.50% Rates stabilized

From this table, we can observe that:

  • Rate Hikes: Typically lead to increased mortgage rates.
  • Rate Pauses or Steady Rates: Often result in stabilized or slightly decreased rates.

Expert Predictions for Post-July Fed Meeting

Experts are divided on whether mortgage rates will fall after the upcoming Fed meeting in July. Here are some key viewpoints:

  • Fed stance on rates: The Federal Reserve is expected to maintain current interest rates, focused on controlling inflation even though it has shown some signs of cooling down.
  • Market expectations: With the Fed holding steady, mortgage rates which are influenced by the federal funds rate are also likely to remain stable around the high 6% range for 30-year fixed mortgages.

Optimistic Outlook

  • Moderating Inflation: Some believe that inflation will start to moderate in the coming months, leading to lower mortgage rates.
  • Stable Economic Growth: With stable economic growth, the Fed might avoid further rate hikes, providing relief to mortgage rates.

Pessimistic Outlook

  • Persistent Inflation: Others argue that inflation might remain stubbornly high, forcing the Fed to continue its tightening measures, which could keep mortgage rates elevated.
  • Geopolitical Risks: Ongoing geopolitical tensions could add uncertainty to the global economy, affecting rates negatively.

What Should Homebuyers and Homeowners Do?

Given the uncertainty surrounding mortgage rates, here's what homebuyers and homeowners can consider:

For Potential Homebuyers:

  • Lock in Rates: If you're planning to buy a home, consider locking in current rates to avoid future increases.
  • Stay Informed: Keep an eye on economic indicators and Fed announcements.

For Homeowners with Adjustable-Rate Mortgages (ARMs):

  • Refinance: If you have an ARM, it might be wise to refinance to a fixed-rate mortgage to protect against potential rate hikes.
  • Consult Financial Advisors: Seek advice from financial experts to make informed decisions based on your specific situation.

Summary

While predicting exact movements in mortgage rates is challenging, understanding the factors influencing them can help you make informed decisions. The July Fed meeting's outcomes will provide crucial insights into the direction of rates. Whether you're a potential homebuyer or a current homeowner, staying informed and considering expert advice will be key to navigating the evolving mortgage landscape.

Stay tuned for updates after the Fed's meeting and adjust your strategies accordingly.

ALSO READ:

Blog Posts

Contact

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

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