Are More Homeowners Selling as Mortgage Rates Come Down?
If you’re looking to buy a home, the recent downward trend in mortgage rates is good news because it helps with affordability. But there’s another way this benefits you – it may inspire more homeowners to put their houses up for sale. The Mortgage Rate Lock-In Effect Over the past year, one factor that’s really limited the options for your move is how few homes were on the market. That’s because many homeowners chose to delay their plans to sell once mortgage rates went up. An article from Freddie Mac explains: “The lack of housing supply was partly driven by the rate lock-in effect. . . . With higher rates, the incentive for existing homeowners to list their property and move to a new house has greatly diminished, leaving them rate locked.” These homeowners decided to stay put and keep their current lower mortgage rate, rather than move and take on a higher one on their next home. Early Signs Show Those Homeowners Are Ready To Move Again According to the latest data from Realtor.com, there were more homeowners putting their houses up for sale, known in the industry as new listings, in December 2023 compared to December 2022 (see graph below): Here's why this is so significant. Typically, activity in the housing market cools down in the later months of the year as some sellers choose to delay their moves until January rolls around. This is the first time since 2020 that we’ve seen an uptick in new listings this time of year. This could be a signal that the rate lock-in effect is easing a bit in response to lower rates. What This Means for You While there isn’t going to suddenly be an influx of options for your home search, it does mean more sellers may be deciding to list. According to a recent article from the Joint Center for Housing Studies (JCHS): “A reduction in interest rates could alleviate the lock-in effect and help lift homeowner mobility. Indeed, interest rates have recently declined, falling by a full percentage point from October to November 2023 . . . Further decreases would reduce the barrier to moving and give homeowners looking to sell a newfound sense of urgency . . .” And that means you may see more homes come onto the market to give you more fresh options to choose from. Bottom Line As mortgage rates come down, more sellers may re-enter the market – that gives you an opportunity to find the home you’re looking for. Let’s connect so you’ve got a local expert on your side who’ll help you stay on top of the latest listings in our area. Top Realtor, Marquesa Hobbs, is ready to help you plan for 2024! cell 719.238.0330 office 719.536.4444 Marquesa@ColoradoHearthstone.com 6760 Corporate Drive, Ste. 300 | Colorado Springs, CO 80919
3 Key Factors Affecting Home Affordability
Over the past year, a lot of people have been talking about housing affordability and how tight it’s gotten. But just recently, there’s been a little bit of relief on that front. Mortgage rates have gone down since their most recent peak in October. But there’s more to being able to afford a home than just mortgage rates. To really understand home affordability, you need to look at the combination of three important factors: mortgage rates, home prices, and wages. Let’s dive into the latest data on each one to see why affordability is improving. 1. Mortgage Rates Mortgage rates have come down in recent months. And looking forward, most experts expect them to decline further over the course of the year. Jiayi Xu, an economist at Realtor.com, explains: “While there could be some fluctuations in the path forward … the general expectation is that mortgage rates will continue to trend downward, as long as the economy continues to see progress on inflation.” And even a small change in mortgage rates can have a big impact on your purchasing power, making it easier for you to afford the home you want by reducing your monthly mortgage payment. 2. Home Prices The second important factor is home prices. After going up at a relatively normal pace last year, they’re expected to continue rising moderately in 2024. That’s because even with inventory projected to grow slightly this year, there still aren’t enough homes for sale for all the people who want to buy them. According to Lisa Sturtevant, Chief Economist at Bright MLS: “More inventory will be generally offset by more buyers in the market. As a result, it is expected that, overall, the median home price in the U.S. will grow modestly . . .” That’s great news for you because it means prices aren’t likely to skyrocket like they did during the pandemic. But it also means it’ll probably cost you more to wait. So, if you’re ready, willing, and able to buy, and you can find the right home, purchasing before more buyers enter the market and prices rise further might be in your best interest. 3. Wages Another positive factor in affordability right now is rising income. The graph below uses data from the Federal Reserve to show how wages have grown over time: If you look at the blue dotted trendline, you can see the rate at which wages typically rise. But on the right side of the graph, wages are above the trend line today, meaning they’re going up at a higher rate than normal. Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage. That’s because you don’t have to put as much of your paycheck toward your monthly housing cost. What This Means for You Home affordability depends on three things: mortgage rates, home prices, and wages. The good news is, they’re moving in a positive direction for buyers overall. Bottom Line If you're thinking about buying a home, it's important to know the main factors impacting affordability are improving. To get the latest updates on each, let's connect. Top Realtor, Marquesa Hobbs, is ready to help you plan for 2024! cell 719.238.0330 office 719.536.4444 Marquesa@ColoradoHearthstone.com 6760 Corporate Drive, Ste. 300 | Colorado Springs, CO 80919
What to expect in Real estate in Colorado Springs, CO in 2024
Many are anxious to hear what it looks like to buy and sell a home in Colorado Springs in this new year. I am encouraged by what I hear and see in the economy and what the projection looks like for Interest Rates, increased inventory, and employment in the Pikes Peak Area. There's a lot of reason to be optimistic if you're thinking of buying or selling a home this year. Colorado Springs is one of the best places in the country to live, work, and play; the quality of life is amazing, public schools are fantastic, employers are moving here and bringing great jobs, and real estate hold their value, so I have some really exciting things on the forefront if you’re looking to buy or sell. What is going on with the interest rates? People ask me what interest rates are going to do and I wish I had a crystal ball to tell everyone, but there's so many things that impact interest rates, of course there’s what's going on in the world. There’s geopolitical and economic variables, we're all wondering what's the FED going to do. There's the unemployment rate, but when we look at interest rates and compare them to three years ago, it was considered high at 3%, and now we're up to 7%. If you look around October of last year, we're actually down. I remember when interest rates were at 16%. A lot of people here, especially the younger population, have friends that bought in the 3% so to them it's not normal. The new normal is really going to be right around 6 - 6.5% we're going to go up a little bit and some people say at the end of this year we're actually going to be a little bit below 6%. If people are looking to purchase a home, what should they to? There are some great incentives right now, and of course...get your team of professionals, a trusted realtor, and a lender who can share different programs with you, and your financial advisor. Together we can make a custom plan for you. Are you ready to learn more about Buying & Selling real estate to build financial security and increase your net worth? Learn more here, and reach out to Marquesa Hobbs, Top Pikes Peak area realtor at The Platinum Group to learn more! Top Realtor, Marquesa Hobbs, is ready to help you plan for 2024! cell 719.238.0330 office 719.536.4444 Marquesa@ColoradoHearthstone.com 6760 Corporate Drive, Ste. 300 | Colorado Springs, CO 80919
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