Mortgage rates have been falling consistently for 3 months. Many folks were worried that an interest rate hike by the FED would cause a spike in mortgages, but it's actually be quite the opposite. The stock market has been taking a real beating lately due to both the increase in rates from the FED and from China's tumultuous economy. Because of this, many investors have been dumping their capital into US bonds. The increase in funding from bonds means that Government affiliated mortgage lenders are flushed with funds to purchase more mortgages from banks. The housing market has been performing very well over the last year and half to two years, which creates a surplus of new mortgages for lenders. These mortgage lenders usually sell their mortgages after some time to Government associated lending giants, Fannie Mae and Freddie Mac. Because there is such a steady influx of new mortgages coming their way, these institutions are able to offer a lower interest rate than they have been in the recent past. The current 30 year fixed rate is around 3.79%. That's not the lowest that we've ever seen, but it is incredibly competitive. CNN Money has offered a short article to explain some of this entitled, "Mortgage Rates are Still Getting Cheaper" by Kathryn Vasel. There is also a short video to accompany the piece.
The real difficulty that we're facing right now in the real estate market is a thin inventory. There has been a surge of folks ready and willing to buy, which is great. However, there has not been a reciprocal amount of sellers. A healthy inventory for real estate is around "6 months". What this means is that if we continued to sell the way that we are but did not add any more homes to the inventory that we would sell out in 6 months. The last time I checked, we were around 4.5 months of inventory. That's good and bad depending on your side of the fence. It is good to be lower because it's indicative of a healthy market meaning that homes are selling at a rapid rate. On the other hand, it can be quite difficult if you are buyer because the seller has a bit more leverage. When it is a seller's market, you don't see sellers taking very low offers of reducing their list price as often. Last Spring-Summer, I saw a lot of offers that were presented at list price or slightly above in multiple-offer scenarios. That is not necessarily bad. Real estate is dictated by the market. That means that prices fluctuate according to what people are willing to pay for a property. If you buy a home for X amount of money, then it is likely to worth that amount or more. That system is supported by the appraisal process. When prices are inflated for a product, it is usually because some individual or company has set their price price artificially. The crash that we saw a few years ago was not a result of an organic market. That was a result of a group of companies getting together and offering a faulty product, which artificially inflated a market. As long as we continue to see these sensical rates, we are not likely to face another major decline in the real estate market. This is also great news for young people because it is definite that the rental market will continue to surge with no apparent end. The rental market is what we should be focusing on right now. Rates are increasing at an unbearable rate making it very difficult to find affordable rentals.
As always, let me know if yo have any questions regarding real estate! If you're thinking about buying or selling, I would be honored to help you!
Also, my girlfriend Rachel and I just got a new puppy yesterday, so here are some pictures! His name is Rancher. He was a rescue from Palmetto Paws and he's some sort of Australian Shepherd mix.
Troy Franklin Gandee