When mortgage rates spiked up over the last few years, some homeowners put their plans to move on pause. Maybe you did too because you didn’t want to sell and take on a higher mortgage rate for your next home. But is that still the right strategy for you?

In today’s market, data shows more homeowners are getting used to where rates are and thinking it may be time to move. As Mark Zandi, Chief Economist at Moody’s Analytics, explains:

“Listings are up a bit as life events and job changes are putting increasing pressure on locked-in homeowners to sell their homes. Homeowners may also be slowly coming to the realization that mortgage rates aren’t going back anywhere near the rate on their existing mortgage.”

A recent study from Bank of America sheds light on some of the things homeowners say would make them sell, even with rates where they are right now (see visual below):

What Would Motivate You To Move?

Now that you know why other people would move, take a minute to think about what would make a move worth it for you. Is it time to take a chance and go for your dream job, even though it’s not local? Are you looking for a neighborhood that has more to offer and a close-knit sense of community? Maybe you just need more space, you’re looking for your next great adventure, or you want a house that opens up rental opportunities to pad your income.

And here’s something else to consider. Mortgage rates are still expected to go down over the course of the year. And once that happens, there’s going to be a big rush of buyers jumping back into the market. While you could delay your plans until rates drop, you’ll only have more competition with those buyers if you do.

So, does that mean it’s worth it to move now, even with rates where they are? The answer is: that it depends.

You’ll want to consider today’s mortgage rates, where they’re expected to go from here, and what would prompt you to want to make a change as you decide on your next steps. An expert can help with that. 

Bottom Line

Other homeowners are getting used to rates and deciding to move. Talk to a local real estate agent to go over what matters most to you and if it’s time for you to jump back into the market too. 

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Thinking about selling your house and wondering if now’s a good time to do it? Here’s what you need to know. Even though the number of homes for sale has been growing this year, there still aren’t enough homes on the market for all the buyers who want to buy.

So, what does that mean for you? To keep it simple, it means it’s still a seller’s market. Here’s how it works:

• A neutral market is when supply and demand is balanced. Basically, there are enough homes to meet buyer demand based on the current sales pace, and home prices hold fairly steady.
• A buyer’s market is when there are more homes for sale than there are buyers. When that happens, buyers have more negotiation power because sellers are willing to make compromises to close the deal. In a buyer’s market, sellers may have to do price cuts to re-ignite interest in their home, and prices may go down. But we haven’t seen this for years since there are so few homes available to buy.
• In a seller’s market, it’s just the opposite. When the supply of homes for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. That creates increased competition among purchasers which can lead to more bidding wars. And if buyers know they may be entering a bidding war, they’re going to do their best to submit a very attractive offer upfront. This could drive the final sale price of your house up.

The graph below uses data from the National Association of Realtors to show just how deep into seller’s market territory we still are today:

What Does This Mean for You?

The market is still working in your favor. If you lean on an agent for advice on how to get your house list ready and how to price it competitively, it should get a lot of attention from eager buyers. That means you’ll likely get multiple offers and see your house sell quickly and for top dollar. As a recent article from Ramsey Solutions explains:

“A seller’s market is when demand for homes is higher than the supply of homes. And that’s still the case right now. If you’re planning to sell your house, you can expect to sell it fairly quickly for close to your asking price—as long as your asking price is realistic for the current market.”

Bottom Line

Today’s housing market still favors sellers. If you’re ready to sell your house, connect with a local real estate advisor so you can start making your moves.

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If you’ve been holding off on selling your house to make a move because you felt mortgage rates were too high, their recent downward trend is exciting news for you. Mortgage rates have descended since last October when they hit 7.79%. In fact, they’ve been below 7% for over a month now (see graph below):

And while they’re not going back to the 3% we saw during the ‘unicorn’ years, they are expected to continue to go down from where they are now in the near future. As Dean Baker, Senior Economist at the Center for Economic Research, explains:

“It also appears that mortgage rates are now falling again. They will almost certainly not fall to pandemic lows, although we may soon see rates under 6.0 percent, which would be low by pre-Great Recession standards.”

Here are two reasons why this recent trend, and the expectation it’ll continue, is such good news for you.

You May Not Feel as Locked-In to Your Current Mortgage Rate

With mortgage rates already significantly lower than they were just a few months ago, you may feel less locked-in to the current mortgage rate you have on your house. When mortgage rates were higher, moving to a new home meant possibly trading in a low rate for one up near 8%.

However, with rates dropping, the difference between your current mortgage rate and the new rate you’d be taking on isn’t as big as it was. That makes moving more affordable than it was just a few months ago. As Lance Lambert, Founder of ResiClub, explains:

“We might be at peak “lock-in effect.” Some move-up or lifestyle sellers might be coming to terms with the fact 3% and 4% mortgage rates aren’t returning anytime soon.”

More Buyers Will Be Coming to the Market

According to data from Bright MLS, the top reason buyers have been waiting to take the plunge into homeownership is high mortgage rates (see graph below):

Lower mortgage rates mean buyers can potentially save money on their home loans, making the prospect of purchasing a home more attractive and affordable. Now that rates are easing, more buyers are likely to feel they’re ready to jump back into the market and make their move. And more buyers mean more demand for your house.

Bottom Line

If you’ve been waiting to sell because you didn’t want to take on a larger mortgage rate or you thought buyers weren’t out there, the recent decline in mortgage rates may be your sign it’s time to make your move. When you’re ready, connect with a local real estate agent.

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If you’re thinking about buying or selling a home, you might have heard that it’s tough right now because mortgage rates are higher than they’ve been over the past few years, and home prices are rising. That much is true. Take a look at the graph below. It breaks down how the current affordability situation stacks up to recent years.

The National Association of Realtors (NAR) explains how to read the values on the graph:

“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home.”

The black dotted line represents that 100 value on the index. Essentially, the higher the bar, the more affordable homes are. As you can see, the orange bar for today shows higher mortgage rates and home prices have created a clear challenge. But, while affordability is definitely tighter right now, that doesn’t mean the housing market is at a standstill.

According to NAR, based on the pace of sales right now, just under 4 million homes will sell this year. With some simple math, let’s break down what that really means for you:

• 3.96 million homes divided by 365 days in a year = 10,849 houses sell each day
• 10,849 divided by 24 hours in a day = 452 houses sell per hour
• 452 divided by 60 minutes in an hour = about 8 houses sell each minute

So, on average, over 10,000 homes sell each day in this country. Whether you’re a buyer or a seller, this goes to show there are still ways to make your move possible, even at a time when affordability is tight.

An Agent Can Help You Make Your Move a Reality

You may be wondering how other homebuyers and sellers are making this happen now. One of the biggest game-changers in today’s market is working with a trusted local real estate agent. Great agents are helping other people just like you navigate today’s market and the current affordability situation, and their insight is invaluable right now.

True professionals will be able to offer advice tailored to your specific wants, needs, budget, and more. Not to mention, they’ll also be able to draw on their experience of what’s working for other buyers and sellers right now. This could mean broadening your search, if needed, to include other housing types like condos, townhouses, or neighborhoods a bit further out to help offset some of the affordability challenges today. 

Bottom Line

You might think there aren’t many people buying or selling homes right now since affordability is tighter than it’s been in quite some time, but that’s not the case. It’s true that buying a home has become more expensive over the past couple of years, but people are still moving.

If you’re hoping to buy or sell a home today, know that other people are still making their goals a reality – and that’s happening in large part because of the help and advice of skilled real estate agents. Want to talk to a trusted professional about your own move? Connect with a local real estate agent.  

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Some Highlights

• Here’s what you really need to know about a few myths causing fear in today’s housing market.
• Despite common misconceptions, many people can buy a home even if they have student loans, home prices are rising nationally (not falling), and you usually don’t have to have 20% for a down payment.
• If you have other fears or reservations about buying a home today, get in touch with a real estate expert who can help clear those up.

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Some Highlights

• Wondering why the supply of homes for sale is limited today? There are a few factors at play.
• Lack of building over time, the mortgage rate lock-in effect, and people staying in their houses longer are three of the main reasons why supply is low.
• But real estate agents know exactly where to look and what to do to make your dream a reality. Connect with an agent so you have an expert on your side to help you successfully navigate the market and find your next home. 

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You might remember the housing crash in 2008, even if you didn’t own a home at the time. If you’re worried there’s going to be a repeat of what happened back then, there’s good news – the housing market now is different from 2008.

One important reason is there aren’t enough homes for sale. That means there’s an undersupply, not an oversupply like the last time. For the market to crash, there would have to be too many houses for sale, but the data doesn’t show that happening.

Housing supply comes from three main sources:

• Homeowners deciding to sell their houses
• Newly built homes
• Distressed properties (foreclosures or short sales)

Here’s a closer look at today’s housing inventory to understand why this isn’t like 2008.

Homeowners Deciding To Sell Their Houses

Although housing supply did grow compared to last year, it’s still low. The current months’ supply is below the norm. The graph below shows this more clearly. If you look at the latest data (shown in green), compared to 2008 (shown in red), there’s only about a third of that available inventory today.

So, what does this mean? There just aren’t enough homes available to make home values drop. To have a repeat of 2008, there’d need to be a lot more people selling their houses with very few buyers, and that’s not happening right now.

Newly Built Homes

People are also talking a lot about what’s going on with newly built houses these days, and that might make you wonder if homebuilders are overdoing it. The graph below shows the number of new houses built over the last 52 years:

The 14 years of underbuilding (shown in red) is a big part of the reason why inventory is so low today. Basically, builders haven’t been building enough homes for years now and that’s created a significant deficit in supply.

While the final blue bar on the graph shows that’s ramping up and is on pace to hit the long-term average again, it won’t suddenly create an oversupply. That’s because there’s too much of a gap to make up. Plus, builders are being intentional about not overbuilding homes like they did during the bubble.

Distressed Properties (Foreclosures and Short Sales)

The last place inventory can come from is distressed properties, including short sales and foreclosures. Back during the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to get a home loan they couldn’t truly afford.

Today, lending standards are much tighter, resulting in more qualified buyers and far fewer foreclosures. The graph below uses data from the Federal Reserve to show how things have changed since the housing crash:

This graph illustrates, as lending standards got tighter and buyers were more qualified, the number of foreclosures started to go down. And in 2020 and 2021, the combination of a moratorium on foreclosures and the forbearance program helped prevent a repeat of the wave of foreclosures we saw back around 2008.

The forbearance program was a game changer, giving homeowners options for things like loan deferrals and modifications they didn’t have before. And data on the success of that program shows four out of every five homeowners coming out of forbearance are either paid in full or have worked out a repayment plan to avoid foreclosure. These are a few of the biggest reasons there won’t be a wave of foreclosures coming to the market.

What This Means for You

Inventory levels aren’t anywhere near where they’d need to be for prices to drop significantly and the housing market to crash. According to Bankrate, that isn’t going to change anytime soon, especially considering buyer demand is still strong:

“This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.”

Bottom Line

The market doesn’t have enough available homes for a repeat of the 2008 housing crisis – and there’s nothing that suggests that will change anytime soon. That’s why housing inventory tells us there’s no crash on the horizon.

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Some Highlights

• There are only about half the number of homes for sale compared to the last normal years in the market.
• That means buyers don’t have enough options right now. So, if you work with an agent to list your house, it should be in the spotlight. 
• If you’re thinking of selling, get in touch with a local real estate agent so your house can stand out while there’s such a shortage of supply and buyers are craving more options.

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The housing market continues to shift and change, and in a fast-moving landscape like we’re in right now, it’s more important than ever to have a trusted real estate agent on your side. Whether you’re buying your first home or selling once again, it’s mission critical to work with an expert who can guide you through each unique step of the process. 

The reality is, not all agents operate the same way. To truly make a powerful and confident decision as you buy or sell a home, you need a real estate expert who uses their knowledge of what’s really happening with home prices, housing supply, industry projections, and more to give you the best possible advice. Someone who can provide clarity and trust like that is essential to your success. Jay Thompson, Real Estate Industry Consultant, explains:

“Housing market headlines are everywhere. Many are quite sensational, ending with exclamation points or predicting impending doom for the industry. Clickbait, the sensationalizing of headlines and content, has been an issue since the dawn of the internet, and housing news is not immune to it.”

Unfortunately, when information in the media isn’t clear, it can generate a lot of fear and uncertainty for consumers. As Jason Lewris, Co-Founder and Chief Data Officer at Parcl, says:

“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”

But it doesn’t have to be that way. Buying a home is a big decision, and it should be one you feel confident making. You can lean on an expert to help you separate fact from fiction and get the answers you need.

The right agent can assist you in figuring out what’s going on at the national level and in your local area. They can debunk headlines using data you can trust. Experts have in-depth knowledge of the industry and can provide context, so you know how current trends compare to the normal ebbs and flows in the housing market, historical data, and more.

Then, to make sure you have the full picture, an agent can tell you if your local area is following the national trend or if they’re seeing something different in your market. Together, you can use all that information to make the best possible decision.

After all, making a move is a potentially life-changing milestone. It should be something you feel ready for and excited about. And that’s where a trusted expert comes in.

Bottom Line

If you want sound advice and trusted information about the housing market, reach out to a local real estate professional today.

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If you’re following mortgage rates because you know they impact your borrowing costs, you may be wondering what the future holds for them. Unfortunately, there’s no easy way to answer that question because mortgage rates are notoriously hard to forecast.  

But, there’s one thing that’s historically a good indicator of what’ll happen with rates, and that’s the relationship between the 30-Year Mortgage Rate and the 10-Year Treasury Yield. Here’s a graph showing those two metrics since Freddie Mac started keeping mortgage rate records in 1972:

As the graph shows, historically, the average spread between the two over the last 50 years was 1.72 percentage points (also commonly referred to as 172 basis points). If you look at the trend line you can see when the Treasury Yield trends up, mortgage rates will usually respond. And, when the Yield drops, mortgage rates tend to follow. While they typically move in sync like this, the gap between the two has remained about 1.72 percentage points for quite some time. But, what’s crucial to notice is that spread is widening far beyond the norm lately (see graph below):

If you’re asking yourself: what’s pushing the spread beyond its typical average? It’s primarily because of uncertainty in the financial markets. Factors such as inflation, other economic drivers, and the policy and decisions from the Federal Reserve (The Fed) are all influencing mortgage rates and a widening spread.

Why Does This Matter for You?

This may feel overly technical and granular, but here’s why homebuyers like you should understand the spread. It means, based on the normal historical gap between the two, there’s room for mortgage rates to improve today.

And, experts think that’s what lies ahead as long as inflation continues to cool. As Odeta Kushi, Deputy Chief Economist at First American, explains:

“It’s reasonable to assume that the spread and, therefore, mortgage rates will retreat in the second half of the year if the Fed takes its foot off the monetary tightening pedal . . . However, it’s unlikely that the spread will return to its historical average of 170 basis points, as some risks are here to stay.”

Similarly, an article from Forbes says:

“Though housing market watchers expect mortgage rates to remain elevated amid ongoing economic uncertainty and the Federal Reserve’s rate-hiking war on inflation, they believe rates peaked last fall and will decline—to some degree—later this year, barring any unforeseen surprises.”

Bottom Line

If you’re either a first-time home buyer or a current homeowner thinking of moving into a home that better fits your current needs, keep on top of what’s happening with mortgage rates and what experts think will happen in the coming months.

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