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November 15, 2024
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November 15, 2024
What Should Homebuyers Do Now?
Market Update
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What should homebuyers do now? Mortgage rates remain slightly above 7% this week, according to Mortgage News Daily, for a 30-year fixed prime borrower.
Looking ahead to 2025, here are some forecasts for mortgage rates:
- Fannie Mae: 5.7%
- Mortgage Bankers Association (MBA): 5.9%
- National Association of Home Builders: 5.94%
The mortgage industry has experienced significant changes over the past few decades. In 1993, the total number of home sales was approximately 3.8 million. This year, Altos Research projects the number of home sales to be around 4 million, despite the U.S. population increasing by 85 million—from 260 million to 345 million.
This disproportionate growth in home sales compared to population growth highlights the significant pent-up demand among homebuyers. If mortgage rates decline to around 6%, a surge in homebuying activity could occur, similar to trends observed just a few weeks ago.
The biggest issue homebuyers face is overall housing supply. The home-building industry suffered significant setbacks after the 2007 Great Recession, when new home construction declined by nearly 75% from the peak. Las Vegas, in particular, was at the forefront. Builders faced a perfect storm of challenges:
- Excess inventory of foreclosed homes flooding the market
- Stricter lending standards for both buyers and builders
- High costs of labor and materials
- Lingering economic uncertainty, which kept buyers cautious
Fast forward to today, and the consequences of this prolonged slowdown are clear. According to the National Association of Realtors (NAR), the U.S. faces a housing shortage of 5.5 million homes.
For homebuyers, this shortage means ongoing upward pressure on prices for both new and existing homes. Addressing this shortage will take time and require significant coordination. However, challenges like rising interest rates, material costs, and labor shortages continue to hinder progress.
Timing is critical. Homebuyers who wait for rates to drop may face increased competition from others entering the market. Acting now, even with slightly higher rates, can provide homebuyers with more negotiating power on price and terms.
Featuring:
The information contained is the viewpoint of the presenter(s). Individuals should consult their own financial representative.
Estimated Mortgage Payment is for exemplary purposes only. Contact a licensed loan officer for exact numbers and APR. Additional rates and terms may apply and are subject to change without notice. Loan scenario assumes a purchase price of Zillow's list price and a 10% down payment. Points and fees not included. Property tax, homeowners insurance, mortgage insurance, and HOA fees are approximate and may vary. Other fees may apply. Product displayed is a conventional 30-year fixed rate mortgage using the current average rate as shown on Mortgage News Daily (mortgagenewsdaily.com).
Estimated Qualifying Income assumes a homebuyer has a FICO score above 740, no other credit debt, and a debt-to-income (DTI) ratio of 43%.
For exact numbers and APR or to run a loan scenario based on your own credit and income, contact our office at (858) 259-8700.
Rate Source: Mortgage News Daily. Rates displayed are approximate, subject to change, and do not necessarily reflect rates available to you. MND’s methods involve an objective component based on lenders' raw prices as well as a subjective impression from their network of originators. For more information about how these rates are calculated, visit www.mortgagenewsdaily.com/mortgage-rates/about.
Mortgage News Daily (MND) is a trademark of Brown House Media, Inc. Zillow is a trademark of Zillow, Inc. CrossCountry Mortgage has not been authorized, sponsored, or otherwise approved by Brown House Media, Inc. or Zillow, Inc.
Equal Housing Opportunity. All loans subject to underwriting approval. Certain restrictions apply. Call (858) 259-8700 for details. All borrowers must meet minimum credit score, loan-to-value, debt-to-income, and other requirements to qualify for any mortgage program. CrossCountry Mortgage, LLC is an FHA Approved Lending Institution and is not acting on behalf of or at the direction of HUD/FHA or the federal government. CrossCountry Mortgage, LLC is not affiliated with or acting on behalf of or at the direction of the Veteran Affairs Office or any government agency. Certificate of Eligibility required for VA loans. By refinancing, the existing loan total finance charges may be higher over the life of the loan.
