It appears that the rate of appreciation in home values, despite slowing down, will continue to increase for the near future, as mortgage rates continue to decrease. In a nutshell, lower mortgage rates allow buyers to spend more on homes, as the lifetime cost of their loans decrease with lower rates. Moreover, as the market has benefited from soaring prices, potential buyers will be able to offer more on homes because they will appraise for more.
During the week of July 15, 2021, the 30-year fixed-rate mortgager (“FRM”) dropped from 2.90% to 2.88%; the 30-year FRM peaked at 3.18% in April 2021 (down .3%). While these numbers don’t seem significant, they amount to a lot of money saved over the life of a 30-year loan. Similarly, the 15-year FRM dropped from 2.24% to 2.22% and the 5-year Treasury-indexed hybrid fell from 2.52% to 2.47%.
It also appears that some sellers have been encouraged by these developments, as the number of new listings in the housing market increased by 5% the previous week; this brings the total inventory of homes on the market to 35% below where they were in July 2020. This represents the 14th week in a row where the year-over-year differences in inventory on the market have shrunk, indicating that the housing sector is “recovering.”
At the Chernov Team we understand that knowledge is power, and knowledge of various sectors of the economy interact with the housing market is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.