The Mortgage Rates of 2022

 The end of 2022 saw a dip in mortgage rates with the 30-year fixed-rate mortgage at an average of 6.49% even though this is down from the week prior at 6.58% it is still way up from the same time last year which averaged 3.11%.

The Federal Reserve has been boosting the interest rates due to easing the rising inflation but they are falling because inflation has “reached its peak.” According to Jerome Powell, Fed Chairman, they started to cool off on the spike in rates December 2022. Although the rates were dipping and home prices were easing up, homebuyer demand was still slowing down at the end of 2022.

“Mortgage rates continued to drop this week as optimism grows around the prospect that the Federal Reserve will slow its pace of rate hikes. Despite some promising developments, we have a long way to go,” said Sam Khater, Freddi Mac’s chief economist.

“The Fed is indicating that the aggressive rate hikes this year have been enough to start slowing inflation,” according to George Ratiu, Realtor.com’s manager of economic research.

He also goes on to explain that the falling away from 7% rates is a relief to homebuyers. Due to the dip, homebuyers have been more positive and welcome the slow down. Mortgage applications have been rising according to the Mortgage Bankers Association.

“The silver lining is that inventory of homes for sale continues ramping up, even with sellers taking a step back from the market this fall. Buyers who are ready can expect more properties to choose from, and a better negotiating position,” says Ratiu.

Click Here For the Source of the Information.

The Second Quarter of 2021 Sees a Rise in Real Estate Market Values

According to the "Flow of Funds" from the current Federal Reserve Z.1 Financial Accounts of the United States the aggregate market value of all owner-occupied real estate in the United States saw the largest increase in one quarter in the last 21 years. $33.8 trillion was reported in the first quarter of 2021 and rose by $1.1 trillion in the second quarter.

The Federal Reserve Z.1 Financial Accounts used to be known as the Flow of Funds accounts. This is a collection of financial accounts where the data is taken from them to see what funds are being used by whom. Basically, it is a way to track the net money going in and money coming out from several sectors of the US economy.

Due to lack of housing inventory, home prices are the highest we have seen in a while. Home mortgages also have jumped to $11.3 trillion which was a rise of $220 billion. Real estate assets are increasing faster than real estate liabilities. The Mortgage Bankers Association (MBA) reported as of September 12, indicates a forbearance rate of 3%.

The second quarter of 2021 saw a 12% year over year of appreciation of the market value of all real estate assets. Aggregate owners' equity also jumped to $23.6 trillion which was 68% of all household real estate, making it the highest seen since 1989.

Click Here For the Source of the Information.

Investing Your Money In Real Estate Versus Stocks

A study conducted by the Federal Reserve Bank of New York found that the majority of homeowners believed investing in their house over the stock market was a better investment. In fact, over 50% of the households surveyed in the New York Fed survey said they would choose to invest in a rental property versus the overall stock market.

The SCE Housing Survey was conducted in February 2020, October 2020 and February 2021. Most data confirmed that housing represents the largest asset owned by most households and is a major means of wealth accumulation, particularly for the middle class. Those surveyed were asked what they would say to a couple in their early 30's when it comes to investing their money. Over 90% of the respondents said they would invest in a primary residence over the stock market.

The study did see a change from February 2020 to February 2021 in people's outlook on a home. Respondents chose high house prices and lower volatility in 2021 versus 2020 respondents who selected the choice of desired living environment that provides stability. This change has been pinned on the COVID-19 pandemic. The survey showed a dip in October 2020 of preference for housing. Consumers were worried during the pandemic about health safety and job stability.

Overall the survey highlights the importance that is currently put on housing as investments. Investors and homeowners alike feel that the housing market is currently more stable than the aggregate stock market.

Click Here For the Source of the Information.

Housing Market Is on its Way Towards a Full Recovery

One of the key indicators that the housing market is on its way towards a full recovery post-Recession is house prices.  House prices reached “bubble status” pre-Recession and was the partial cause of the entire crash of the mortgage industry during the crisis because buyers found themselves living in homes with loans that vastly exceeded the appraised value of the home.  House prices must maintain a delicate balance as the ebb and flow of the housing market dictated by new home and existing home buyer supply and demand raises and lowers pricing year-over-year.

The House Price Index (HPI) reported that house prices have been increasing for the last three months as of May, 2015, which had an annual growth rate of 5.4%.  That percentage was higher than April’s increase of 4.7% and March’s increase of 3.8%.  The HPI is issused by the Federal Housing Finance Agency, and another report by The Standard and Poor’s/Case-Shiller also showed a slower growth based on a moving three-month average.  This growth in home prices shows a strong demand for new and existing homes from home buyers nationwide.

The National Association of Realtors (NAR) also had good news to report about existing homes under contract nationally.  The Pending Home Sales Index (PHSI) reached a record-high in 9 years in May, 2015, and declined only slightly in June.  This statistic is based on homes with signed contracts as reported to the NAR.  Even with the decline, the PHSI was up 8.2% compared to June, 2014, and the number of homes under contract has been increasing for the last 10 months consecutively.  The Southern Region reflected a 5% increase for the entire year of 2015 for contracts on homes for sale.

Click Here and Here for the Sources of the Information.