Updated: Jul 13, 2022
The weather isn't the only thing that's going to be hot this summer - the housing market will be as well.
Not only has residential real estate made full recovery from last year, but households that delayed their plans during the height of the health crisis are ready to regroup. If you're thinking of buying a home, this summer may be your moment. Here's a dive into some of the biggest wins for home buyers this season.
1. Mortgage Rates are still LOW.
Last year, the lowest mortgage rates in recorded history as they fell below 3%, first time ever. This season, they're inching up slightly, but are still incredibly low compared to the historic norm. According to Freddie Mac
"We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year mortgage rate will average 3.4% in the fourth quarter of 2021, rising 3.8% in the fourth quarter of 2022."
Today's low mortgage rates are creating a great opportunity for buyers, but it's unlikely they'll last much longer. Buying this summer is the best way to secure a home with an impressively low rate.
2. Buying is More Affordable than Renting
With today's low mortgage rates leading the way, buyer purchasing power is strong. According to Mike Loftin, author of Homeownership is Affordable Housing from the urban Institute:
"Contrary to popular belief, owning one's own home is frequently more affordable than renting. It is cheaper to buy a home than it is to rent in 2/3 of American counties.”
Buying a home now instead of renting one may be the game-changer that amplifies long-term savings for renters who are ready to become homeowners. When paying a mortgage as opposed to paying rent, that money is reinvested back in your favor, so you're contributing to your own net worth when you own a home. This is a term called equity, and it's one of the biggest financial benefits of home ownership.
3. Equity is Growing
The latest Homeowner Equity Report from Carelogic notes that the average homeowner gained $26,300 equity over the past year. With equity growing so significantly, you can feel confident that home ownership is a sound investment in your future.
4. Home Prices are STILL Appreciating
According to many leading experts, home prices are expected to appreciate through 2022. When home values rise it's another factor that increases your equity. According to the same report:
"As competition for the dwindling supply of for-sale homes drove prices up, average annual homeowner equity gains in the fourth quarter of 2020 reached the highest level since 2013. For current owners. These gains have created a buffer against financial difficulties brought on by the pandemic."
Knowing home values are increasing while mortgage rates are so low should help you feel confident that buying a home this year is advantageous from a price perspective and as a strong long-term investment.
If you're considering buying a home, this may be your moment, especially with today's low mortgage rates. Let's connect to discuss your changing needs and set you up for success in the home buying process.
Here's a look at what several industry leaders have to say about what home buyers can expect from the housing market this summer and into next year.
Lawrence Yun, Chief Economist at NAR said:
"As mortgage rates increase, the frenzied multiple-offer situation becomes less prevalent by year's end."
According to Greg McBride, Chief Financial Analyst at Bankrate:
"There's no reason to procrastinate, so long as you expect to remain in your home more than a few years so that you can break even on closing costs... Keep in mind: If someone offered today's rates to you this time last year, you would have jumped all over it."
Danielle Hale, Chief Economist at Realtor.com explained:
"Surveys showed that seller confidence continued to rise... Extra confidence plus our recent survey finding that more homeowners than normal are planning to list their homes for sale in the next 12 months suggest that while we may not see an end to the seller's market, we might see the intensity of the competition diminish as buyers have more options to choose from."
The Experts are very optimistic about the housing market right now. If you pressed pause on your real estate plans last year, let's chat to determine how you can re-engage in the home buying process this summer.
Patience is Key in a Competitive Market
According to the Realtors Confidence Index Survey from the National Association of Realtors (NAR), buyer demand across the country is incredibly strong. That's not the case, however, on the supply side. Seller traffic is simply not keeping up, making it challenging in many areas for buyers to find homes to purchase.
NAR also reports that the actual number of homes for sale stands at 1.16 million units. Unsold inventory sits at a 2.4-months' supply at the current sale pace. In a normal market, that number would be 6.0 months of inventory - significantly higher than it is today.
What does this mean for you?
If you're ready to buy and you're having trouble finding a home, remain patient in the search process. At the same time, be ready to act immediately once you find the right home since bidding wars are more common when few houses are up for sale.
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