Whether buying a resale home or having one built, chances are you may need to consider a mortgage. But even if you are paying cash, the state of the market and the overall economy and homebuying trends make have a significant impact on the nature of your purchase. Here are just a few of the 2020 mortgage rate and real estate market trends that experts are reporting so far this year.
Mortgage Rate News You Should Know
As the year began, the mortgage rate was expected to stay low, averaging about 4% through the end of 2019 and into 2020. Fannie Mae, Freddie Mac, the Mortgage Bankers Association and the National Association of Realtors all believed that mortgage rates would remain consistent, closing out 2020 only quarter of a percentage point higher or lower. Experts expected inflation to remain low, trade tensions to level out the Federal Reserve to cut short-term rates at least once, but probably more.
UPODATE: In late February, the COVID-19 situation affected the mortgage rate, driving it down. The 30-year fixed-rate mortgage averaged 3.37% APR on Feb. 28, falling 38 basis points in a single month. Mortgage rates dropped because of a chain of events that began when worried investors worldwide sold stocks and bought bonds. The drop in mortgage rates has made homes more affordable, and refinancing is also attractive at this time. As of this writing the market has started to recover, but home buyers and new home builders may wish to take advantage of the low rates now. If you are in the market to purchase a home, speak with your mortgage broker to see what rates are available to you at this time.
Another trend is the possible opening up of new FHA products. Big banks cut back on underwriting FHA loans over recent years, and nonbank lenders saw their opportunity and stepped into financing an orphaned demographic. However, the departments of Justice and Housing and Urban Development recently reported actions to woo big banks into the game, signaling that homebuyers may benefit from the increased competition, enjoying better service and programs.
Home Sellers are Staying Put
While the average tenure for owning a home has hovered between 7-9 years in the past, today’s home sellers appear to be staying put. They are not moving as often as they used to, which has resulted in a lack of available homes on the market.
Lower-end and first time home buyers are stressed as the shortage of homes for sale has resulted in a seller’s market. Buyers have less say in negotiation, are finding themselves in multiple-offer situations, and may have to pay more for less. Homes under $400,000 are the most affected, while homes in the area of $400,000 – $500,000 are seeing a fairly balanced supply and demand. In 2920, “Inventory could reach a historic low as a steady flow of demand, especially for entry-level homes, and declining seller sentiment combine to keep a lid on sale transactions,” according to Realtor.com.
Is Custom Home Construction the Answer?
The convergence of low interest rates and lack of inventory may turn some home buyer’s eyes towards building a custom home, or renovating a home that is a bit less “polished” than you would like. If you are searching for a quality custom home builder and renovation expert in the Sarasota and Longboat Key areas, call Lindahl Construction. We can advise you as to current inventories, available lots, and help you to determine if a new custom home is the right option for you in 2020.