Friends and clients—
Spring is in the air, and the floodgates have already opened on the traditionally busy selling season.
The fiercer seller’s market that emerged in the wake of last spring’s pandemic shock is still with us as 2021 begins to thaw and bloom.
However, with more inventory expected to hit the market soon, buyers may find a smidgen of relief. If you’re considering a home purchase or a refinance, here’s what you need to know:
Rates are still relatively low, but not for lack of upward pressure…
Catastrophic power outages in the Lone Star state and an increase in rates for 30-year fixed mortgages created downward pressure on demand.
Last month, total mortgage application volume fell by 11.4%, while refinance applications in Texas—home to one of the hottest housing markets in the country—plummeted by 40%.
Freddie Mac reported that the benchmark for a 30-year fixed-rate mortgage had ratcheted up to 2.97%—still historically low. (For context: Last year at this time, Freddie Mac’s benchmark stood at 3.45%).
The Fed is still keeping rates artificially low by buying up billions of dollars of mortgage-backed securities.
However, with rate increases in six of the last eight weeks, it’s clear that we’ve shifted into a rising rate environment.
“I don’t foresee mortgage rates jumping to an alarming level, but we should prepare for a rise of at least a decimal point or two,” said Lawrence Yun, chief economist for the National Association of Realtors.
So, fears of a massive month-over-month rate jump on par with what we saw in June 2013 may not be warranted.
However, with increasingly positive economic outlooks amid vaccine rollouts and expectations for higher budget deficits, the Fed’s focus may soon turn to curbing inflationary pressures.
Prices keep cranking up.
At the end of February, it was reported that home prices had been increasing at the fastest pace since 2014.
In at least 18 of the 20 large cities tracked by the S&P Corelogic Case-Shiller index, home prices rose considerably; Phoenix, Seattle, and San Diego led the pack.
While buyers may find more options to choose from in this busy spring market, the homes they want will be starting out in higher price points.
The writing’s on the wall for homebuyers and refinancers.
It’s better to pick your poison while you still have the choice. Home prices have been against buyers for a while now, but soon, rates won’t be on their side, either.
We saw rates hit new record lows on 14 separate occasions in 2020, but the game of limbo seems to be over.
Buyers waiting to see if rates will dip back down in the coming months will likely end up getting saddled with regret—and a much higher purchase price.
If you’re serious about buying a home in 2021 and locking in a great rate, you need to know that today presents a better opportunity than tomorrow.
If buying a home is in your plans this spring, it’s time to start the process. You can get a jump on the spring market by taking a look at the homes that are available in your area right now:
As always, if you’re thinking about buying or have any questions, give me a call at (574) 529-5228. I’m here to help.
Have a great day.