Rates Are Down, Buyer Interest Is Way Up, and Sellers Are Not Selling!
Updated: Apr 7
Happy St. Patrick’s Day to ALL!
In case anyone doesn’t know … I am Irish – 100% and proud of it! My grandparents came over on the boat from Ireland, one by one in the 1800’s, landed at Ellis Island, had their names misspelled and began the immigrant journey that many of our ancestors have been through as well (that’s a story for another time).
We have much to talk about today – and I’ll keep it at a high level as this economy/market/geopolitical environment seems to swing daily.
Bank failure – and the real estate market reaction
“Mortgage rates fell sharply on Monday as the stunning collapse of Silicon Valley Bank triggered fears of a broader banking meltdown.
The average rate on a 30-year fixed mortgage dropped to 6.57%, according to Mortgage News Daily, down from 6.76% on Monday and a high of 7.05% last Wednesday. (Note that mortgage rates are lower today as well).
Mortgage rates track the yield on 10-year Treasury bonds, which fell on Monday to the lowest level since early February. Treasury yields are heavily influenced by actions either taken or telegraphed by the Federal Reserve. When Treasury yields fall, so do mortgage rates.
Following the bank failure, Wall Street is now betting that the Fed will pause its aggressive interest-rate hike campaign when it meets next week. The probability that the Fed pauses its rate-hike campaign next week rose to 28% on Monday, according to data from the CME Group's FedWatch tool, up from 0% just one day ago. About 71% of traders, meanwhile, are anticipating a typical quarter-point hike,” according to FOXbusiness.com.
Mortgage applications jumped last week as would-be buyers and homeowners capitalized on a sudden drop in rates following the bank failure(s)
The volume of all mortgage applications rose 6.5% compared with the previous week, the Mortgage Bankers Association’s survey for the week ending March 10 found. The volume of purchase applications increased 7% from the week prior on a seasonally adjusted basis, according to Gabriella Cruz-Martinez of Yahoo! Finance.
When will U.S. home prices finally stop dropping?
For the most part, THEY HAVE STOPPED DROPPING! I can only speak to our local market where I track the numbers and temperature of Clayton, Concord, Walnut Creek, Pleasant Hill and Concord. Our available inventory has stayed consistently low based on Q1 averages over the past decade. As an example, there are only 6 homes for sale in the entire city of Clayton right now! Pleasant Hill has 18 homes, Walnut Creek has 41 homes and Concord has 42.
Additionally, Concord has 60 homes that are pending, of which more than half have gone pending this month (34 homes pending in 17 days gives you an idea of demand for homes).
My team and I have received at least 7 calls from Realtors this week, asking if we have any homes coming for sale in the Crossings community? Combine that with the 13 buyers that made an offer on our last Crossings home sale (4479 Pitch Pine Court), and you can see where we’re at. Demand is huge right now! I don’t know how long it will last, but I will tell you that if you have been considering selling your home this year, NOW would be the time to speak to a Realtor.
Sellers: What would motivate you to sell your home right now?
Do you want to be closer to your grandkids? Get into a larger home, different school district, cut down your commute, or just cash out and move on? There are plenty of options to leverage today’s hot market and potentially buy later in the year when the market may be less competitive? You have options for sure and it may be worth contemplating.
For now, I would suggest that homebuyers speak to their lender and get their pre-approval numbers updated; be prepared for multiple offers on most homes and remember to breathe. Homeowners: Please pack a box, begin to purge, and organize a little each week – consider the timing of a move and whether waiting has any benefits or downsides (volatility) as we all navigate this bumpy economy.
Until next time… Erin Go Braugh! (Ireland Forever!)