Category Archives: Real Estate (Market info)

Mortgage rates stayed below 7% for the second week in a row.

The 30-year, fixed mortgage rate averaged 6.67% for the week ending Dec. 21, according to Freddie Mac‘s Primary Mortgage Market Survey. That’s down from last week’s 6.95% and up from 6.27% the same week a year ago. Meanwhile, HousingWire’s Mortgage Rates Center showed Optimal Blue’s average 30-year fixed rate on conventional loans at 6.68% on Thursday. 

“Lower rates are bringing potential homebuyers who were previously waiting on the sidelines back into the market and builders already are starting to feel the positive effects,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “A rise in homebuilder confidence, followed by new home construction reaching its highest level since May, signals a response to meet heightened demand as current inventory remains low.”

Lower rates will have a positive impact on affordability, Lisa Sturtevant, chief economist at Bright MLS, said in a statement. Bright MLS forecasts the average on a fixed-rate mortgage rate to fall to 6.5% by mid-year and to decline further to 6.2% by the end of next year. With a rate of 6.2%, the typical monthly payment on a loan for a $400,000 home would be about $2,700, down from $3,000 with a 7.5% rate.

Locally, we have seen rates as low as 6.625% PAR for top tier borrowers on a 30 year loan and properly qualified borrowers could buy down to 5.99% for less than 2 points.  To put this in perspective, 45 days ago mortgage rates were sitting at roughly 8% for top tier borrowers, on a 500k mortgage this equates to $467/mo lower payments now compared to 45 days ago.

Gena Glaze

Zillow reports that over the next 20 years, more than a quarter (27.4 percent) of the nation’s currently owner-occupied homes are likely to hit the market as their current owners pass away or otherwise vacate their homes.

Places likely to be most impacted by this upcoming Silver Tsunami include both retirement hubs (Miami, Orlando, Tampa and Tucson) and regions where young residents have left (Cleveland, Dayton, Knoxville and Pittsburgh). The impact of the Silver Tsunami is also likely to vary greatly across different areas within metros.

• Housing released by the Silver Tsunami will provide a substantial and sustained boost to housing supply, comparable in magnitude to the fluctuations that new home construction experienced in the 2000s boom-bust cycle.
• It seems likely that, in the coming two decades, the construction industry will need to place a greater focus on updating existing properties, in addition to simply building new homes.

The massive Baby Boomer generation has already begun aging into retirement, and will begin passing away in large numbers in coming decades – releasing a flood of currently owner-occupied homes that could hit the market. That could help end the last few years’ inventory drought, as well as a more fundamental shortage of homes in certain places.

This Silver Tsunami of homes coming to market could be a good substitute for new home construction, which has been in short supply for the past decade in large part because of difficult-to-overcome challenges faced by builders.

Currently, 33.9 percent of owner-occupied U.S. homes are owned by residents aged 60 or older, and 55.2 percent by residents aged 50 or older. As these households age and begin vacating housing, that could represent upwards of 20 million homes hitting the market through the mid-2030s.

But while virtually all areas will feel the effects to some degree, this wave won’t hit all at once and won’t strike all markets equally. Certain markets will be more impacted than others, as will certain kinds of areas within a given market.