Mortgage & Housing Update 8/25/2023
Mortgage & Housing Update 8/25/2023
It was a rough week for home buyers. 30-yr mortgage rates approached 7.5%, a 2 decade high. 2002 rates were driven by different underlying conditions, but the most noticeable observation is that 21 years ago the median home prices were 60% lower.
Be sure to stay in touch and tune in regularly. Like Life Happens, Rates Happen. It’s difficult to predict when the rates will turn, but when they do, there will be an explosion in demand, and hopefully supply.
New Peak for Rates
On 8/22/2023, the average 30-yr mortgage rate hit a 2-decade high of 7.49%. The last time rates were this high was April 2002! When home prices were 60% lower. With core inflation still well above the Fed’s 2% target and strong employment, the market no longer expects rate cuts anytime soon.
The next Fed meeting is on September 20. The market is currently pricing in an 80% probability of no change vs a 20% probability of another 25 basis point hike.
Twenty Years Later…
Here is a comparison between the 2 decades.
In 2022, mortgage rates were actually on their way DOWN (from 9% highs), in the wake of an aggressive Fed LOOSENING campaign as the Dotcom bust (March 2000-October 2002) rumbled on.
The situation is very different today. The Fed is near the end of an aggressive TIGHTENING campaign, and the economy is chugging along despite recession flags.
The most noticeable observation is that home prices have increased 2.5 times since the last time mortgage rates were this high. Affordability has been hit hard.
Fighting over scraps
With inventory so tight, the battle for what’s available has remained fierce. According to the July Realtors Confidence Index, 74% of homes sold in <1 month, 35 sold above the listing price, there was an average of 3 offers for each home Combined with mortgage rates climbing to near 7.5%, would-be sellers are feeling more locked-in than ever.
Life Happens, Rates Happen
if you would like to move, but feel “locked-in” by the low mortgage rate you have on your current home, be sure to stay in touch and tune in regularly.
Life Happens: changes in personal circumstances (marriage, divorce, kids, new job) may cause you to need to act anyway. And also Rates Happen: it’s difficult to predict exactly when rate relief will come (or what will prompt it), but when it does, there will be an explosion in demand and - hopefully - supply.
(source: List Reports)
I Hope you find these updated helpful. I am available for consultations. Find my contact information in the links provided or in my Bio. I encourage you to get pre-approved.
If you are ready to learn more the mortgage options best fit for you, I am happy to help. I encourage you to get pre-approved.
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