The April 14 release of results of Freddie Mac’s Primary Mortgage Market Survey® (PMMS®) shows mortgage rates again moving lower, in response to high demand for Treasuries. The 30-year mortgage rate fell 1 basis point to 3.58 percent. This rate represents yet another low for 2016 and the lowest mark since May 2013.
For Week Ending April 2, 2016
The forecast is bright with a persistent rise in pending home sales. Low mortgage rates and rising rental prices continue to point buyers into the housing market. In order to maintain home-purchase momentum, the supply of homes for sale must grow.
In the Twin Cities region, for the week ending April 2:
For the month of February:
All comparisons are to 2015
Click here for the full Weekly Market Activity Report. From The Skinny Blog.
Mortgage rates this week registered the delayed impact of last week’s sharp drop in Treasury yields as the 30-year mortgage rate fell 12 basis points to 3.59 percent. This rate marks a new low for 2016 and matches last year’s low in February 2015. Low mortgage rates and a positive employment outlook should support a strong housing market in the second quarter of 2016.
It’s no secret that we’re experiencing an inventory shortage. Consumers and real estate professionals are feeling the frustration of a low housing supply after submitting multiple offers without success. This trend is not unique to the Minneapolis and St. Paul area, according to Jonathan Smoke, Chief Economist for Realtor.com:
“The increase in sales is resulting in continued tighter-than-tight supply—measured by NAR to be four months in January… that metric measures the number of months it would take to sell the current inventory of available homes, at the current pace. Six to seven months’ worth of homes on the market is considered normal; four months is cray-cray.”
The present conditions have some professionals wondering what brought us to this point. In an article written by Steve Cook of Real Estate Economy Watch, he lists six reasons that explain what’s keeping owners from selling:
1. One in five homeowners with a mortgage still doesn’t have enough equity to sell.
2. Buyers who bought during the 2004-2006 boom are waiting to make a profit.
3. Inventory shortages are squeezing move-up buyers.
4. There are five million fewer homes to be sold.
5. New home construction was decimated by the housing crash and hasn’t yet recovered.
6. The Boomer timetable has been delayed.
Here are some ideas that might help sellers or real estate professionals adapt to changing conditions:
1. Know your market. Each area is unique and it’s important to stay informed so you can anticipate possible changes. Use MAAR’s market reports or InfoSparks to find the most recent numbers.
2. Be honest and up front. You can’t control the market but you may prevent some disappointment or unreasonable expectations by giving an accurate picture of the market on the front end.
3. Be Prepared to Act Fast. When entering into a multiple offer situation it’s important to have finances in order and be prepared to make quick decisions.
4. Focus on the positive. David Arbit, MAAR’s Director of Research and Economics recently reported that job and wage growth trends remain encouraging. The unemployment rate continues to decline and we’re steadily producing sufficient private jobs to absorb newcomers to the labor force. Wages are growing at their fastest pace in years—an encouraging sign that should offset declining affordability brought on by rising prices and interest rates. Locally, the latest Bureau of Labor Statistics figures show the Minneapolis-St. Paul-Bloomington metropolitan area had the second lowest unemployment rate of any major metro area at 3.1 percent compared to 4.9 percent nationally. Mortgage rates are still below 4.0 percent compared to a long-term average of about 8.0 percent. Rates actually went down after the Federal Reserve’s December hike, though marginally higher rates are expected this year.
5. Serve as a resource. At the end of the day, it is the client’s decision on whether or not they choose to sell. However, real estate professionals should provide the resources necessary to help their client make the most informed decision (market stats, financing, pricing, marketing, etc.).
Judy Shields, Minneapolis Area Association of REALTORS® (MAAR) President has shared her perspective on the situation:
“This spring market will be a telling one for a number of reasons. Many would-be buyers are waiting on sellers. Early indicators such as mortgage applications suggest demand is only likely to strengthen. The uncertainty comes on the supply side, but there’s a good chance we’ll see more inventory this year.”
As the spring season unfolds, we can prepare for the unexpected and work within the current market conditions. Low supply levels are likely to persist in the near term, but it’s important to note that buyers are still finding quality homes—perhaps with a bit of patience and persistence. Hang in there. It’s well worth it.
Sources:
6 Ways to Explain Low Inventory
DAILY REAL ESTATE NEWS | WEDNESDAY, MARCH 23, 2016
Where Have All the Sellers Gone?
REAL ESTATE ECONOMY WATCH | MARCH 17, 2016
For Week Ending March 26, 2016
With spring comes the welcoming of another season: the annual springtime seller’s market. Low inventory levels nationwide are inching sales prices higher and dropping the number of days that homes are staying on the market. With interest rates remaining unexpectedly low, there is even more incentive for buyers to competitively bid on new listings.
In the Twin Cities region, for the week ending March 26:
For the month of February:
All comparisons are to 2015
Click here for the full Weekly Market Activity Report. From The Skinny Blog.
Freddie Mac’s March 31 release of the results of its Primary Mortgage Market Survey® (PMMS®) shows mortgage rates mixed and largely unchanged from the previous week.