Home Buyer and Home Loan Trends
In some ways, markets are like fashion. What is happening one week is not what is happening the next. Real estate is similar. One week can have people fearing an imminent housing collapse, but the next week could have people wondering if home prices could rise forever. Markets are fickle, which means if you want to be in one, you should pay attention to trends. Home buyers and homeowners are in a transition period in the real estate market. Bull markets and massive price increases were all being fueled by historically low mortgage rates. Now that rates have risen and economic uncertainty is on top of everyone’s mind, what can homeowners and home buyers expect? How will home loans and home buying be impacted by today’s trends? The mortgage brokers at Peoples Choice Mortgage are here to help you decipher what today’s data means for home loans and home buyers.
Mortgage Rates are Bouncing
Mortgage rates are trying to find their equilibrium, which will probably be elusive as long as inflation remains a major concern. Home buyers and homeowners have seen mortgage rates rise dramatically since the beginning of the year. Much of this is thanks to interest rate hikes by the Federal Reserve who is doing what they can to keep inflation in check. In the past few weeks, mortgage rates have pulled back to reach a three-week low.
What does this recent drop mean for the future of mortgage rates and home loans? Probably nothing. As long as the Federal Reserve is keeping one eye on inflation and one eye on a potential recession, their actions aren’t predictable. As a result, it is hard to definitively know if we have seen the worst of mortgage rate hikes or if we should anticipate more. Home buyers and homeowners will just have to be comfortable with the uncertainty of this particular trend for the near future. Home buyers should expect that mortgage rates will fluctuate, which means giving yourself more home loan options will be beneficial. Different lenders will have different rates. Working with a mortgage broker who works with a lot of lenders gives you a better chance of locking in the best mortgage rate possible with your home loan.
Home Buyers Making are Tough Choices
Another trend that is confusing to unpack is home buyer demand. There have been many who fear that rising mortgage rates will suddenly clamp down on home buyer demand. However, the numbers paint a murky picture over whether that is actually happening. If you want to believe that home buyers are calling it quits over mortgage rates, then you can look at existing home sales decreasing by 2.4 percent in April. On the other hand, home buyers are still willing to make tremendous sacrifices to win a bidding war. Many home buyers, but especially first-time home buyers have been willing to buy less-than-ideal homes to become homeowners. Some of the things that first-time home buyers have been willing to accept include fixer uppers, subpar locations, and even waiving inspections. If home buyer demand is dropping off so much, then why aren’t first-time home buyers being more selective?
Like mortgage rates, home buyer demand might be a trend that will require more time to decode. For now, it seems like home buyer demand still greatly exceeds the supply of available homes to purchase. If one-half of the real estate story has been mortgage rates, then the other half has been historically low inventory. Home prices have gone through the roof just as much because of a lack of inventory as they have due to low mortgage rates. There simply are not enough homes to buy for everyone who wants to be a homeowner.
Fortunately, this is a trend that might start improving. Last week’s inventory numbers appear to be up about 5 percent year-over-year. Inventory is up about 44 percent from its 2022 low during March. Additionally, custom home builders are showing good gains in 2022. This means there are a lot of home buyers who are choosing to build their own homes rather than compete over existing inventory. Every home buyer that chooses to build their own house is great news for a first-time home buyer who wants to buy an existing home.
Final Thoughts
Home buyers and homeowners are often subject to market forces beyond their control. While you might not be able to change which direction mortgage rates or inventory are trending, you can plan for all scenarios. This will allow you to put yourself in the best situation possible regardless of the trends Great mortgage brokers work with their clients to help them find a home loan that is perfect for their situation regardless of the trends. You want to get a home loan today and know that the mortgage payments will still be affordable down the road. When you have a home loan that is affordable and a house that you love, then trends and markets do not matter.
A house is more than a line item on an asset sheet. A house is a home. It is a place where you can make memories with those you love and a place you can feel secure when times are rough. If you have that, then real estate trends are little more than noise. Too often we think of buying a house merely as an investment. The truth is that being a homeowner is so much more. That’s why for many home buyers, as long as you can afford your mortgage payment, then there is not much more to think about. If you want to find out if having a place of your own is affordable right now, contact us. The mortgage brokers at Peoples Choice Mortgage can provide you with a complimentary mortgage qualifier. From there, you will see if owning a home tomorrow is trending your way.
