Mortgage Market Update – Market Erosion Continues with Rates Stabilinzing

 

From Freddie Mac:

The 30-year fixed-rate mortgage continues to remain just shy of seven percent and is adversely impacting the housing market in the form of declining demand. Additionally, homebuilder confidence has dropped to half what it was just six months ago and construction, particularly single-family residential construction, continues to slow down.

Commentary

  • The rate environment is definitely impacting the market BUT anecdotally I am seeing decent activity.  Not to say this is even close to a healthy market, but it does appear that some buyers are pulling the trigger.  Many of my realtor contacts are validating this with feedback that there are buyers, but much less and the sales process is no longer shooting fish in a barrel.
  • Buyers are becoming way more discerning as they see they are gaining leverage and that walking away, or even the threat, is providing the incentive for sellers to negotiate.  Additionally, there a many more articles coming out about buyer’s remorse from buyers who bought at the peak.
  • Inflation continues to create anxiety people with both the constant reporting and the reality of higher bills.  Since this will likely lead to further rate hikes by the Fed, there is likely to be little help for buyers and homeowners on the rate front.  Additionally, there are more and more reports about families having trouble making ends meet and needing to use credit cards to manage their cash flow gap.  If the financial issues continue, this can lead to catastrophe and ruin for vulnerable households, which could include mortgage default.
  • The mortgage programs available are evolving quickly as lenders try to balance risk with availability to meet borrower demand and to keep their revenue at an acceptable level.  This changing landscape is typical for the end of a cycle, but it means borrowers need to be aware of changes to programs they were considering as well as in tune with new programs or beneficial changes to programs that may mean opportunity for a better loan structure or the ability to buy a better property.  THIS IS NOT DIY TIME!
  • Investment real estate continues to do reasonably well with a definite focus on rentals over flips.  Prices have just not decreased enough to warrant a flip, but low vacancies and rising rents in many markets present good opportunities for income generation.
  • As I always advise, divorcing or recently divorced couples need to be in tune with the market.  I see way too many times when an agreement is not robust enough to work after updated values and rates are entered into the mix.  Again, this is a time for use of specialized professionals with experience in the market and an understanding of divorce.

I always end with a reminder that we have discounts available for veterans, first responders and law enforcement. Make sure that you check out the section of the page covering our commitment to those who served with discounted mediation services.  My lending partner also offers a discount as well, so if your buying or refinancing check it out