After what seemed like the longest school vacation ever (winter break), the real estate market is off to a slow start so far this year. However, you’ll see from some of the articles that there is optimism in the air!
Applications for mortgages are significantly up so far this month compared to the last three months. Mortgage rates are way down from October of last year with the Federal Reserve signaling that they will hold or lower their lending rates for a bit too.
According to Bloomberg News, “Applications for home-purchase mortgages in the U.S. increased last week by the most since June as borrowing costs hovered near a 7-month low. The Mortgage Bankers Association’s gauge of mortgage applications to buy a home increased 5.6% in the week ending Jan. 5, which included the New Year’s Day holiday. An index of overall mortgage applications, which also includes refinancing, climbed 9.9%, the sharpest advance in nearly a year.”
In holding homes open these past couple of weekends, I am seeing more visitors who are out looking, but not approved for a loan yet (i.e., not ready to buy), but educating themselves and researching neighborhoods.
“After several years of feeling priced out of the market,” Bloomberg notes, “potential homebuyers are feeling more hopeful about their chances in 2024, according to a new report from Fannie Mae. That optimism is directly tied to the hope that the Federal Reserve will cut interest rates this year. Rates have dropped nearly one full percentage point since October, to an average of 6.62% for a 30-year fixed rate mortgage last week.”
Inventory
This may be the biggest hurdle to a decent, flowing housing market, at least for the next few months.
As an example, if you wanted to buy a detached home in Clayton right now, you only have a total of 5 homes for sale in the city to choose from! How about Pleasant Hill? 14 homes. Martinez? 16 homes. And so on.
It’s only January and having low inventory is historically the norm, but these numbers are extremely low. Will this drive up prices (supply vs. demand)?
I feel like home prices may rise a bit, but homebuyers may also choose to wait and not get caught up in bidding wars when the costs of living plus home ownership are increasing at the same time.
