Homebuying interest continues to surge, says top exec
Mortgage rates have continued to climb in recent weeks – but that doesn’t appear to have weighed down on real estate and mortgage market activity in upstate New York with huge homebuyer appetite currently evident, according to a leading industry executive.
Mike Rankin, president and licensed loan officer at Clearpath Mortgage Solutions, told Mortgage Professional America that many prospective buyers were remaining undeterred by rising rates, even as the average for 30-year fixed loans ticked above 7.1% last week.
The company saw a new record last week for leads coming in over a one-week period – and while some buyers may be influenced by the idea that they should wait for rates to dip lower before entering the market, Rankin said a clear focus at present is educating clients on the realities of the rate outlook now and looking ahead.
“We just really heavily speak to that in the preapproval process, making sure they understand the temporariness of the rate, the importance of the rate,” he said. “We talk about permanent buydowns, we talk about adjustable-rate mortgages, we talk about the future opportunities to refinance and having reduced cost to refinance.
“We talk about the importance of getting into the market – because it’s an investment. If you get in the market, you can get a fair price on a home even if you overpay a little bit. We’re going to continue to see home values appreciate, because it’s a supply and demand issue.”
Mortgage applications dipped as long-term rates rose for the third straight week, hitting levels not seen since late 2023.https://t.co/owU9E3yret#mortgageindustry #mortgageapplications #economy #mortgage
— Mortgage Professional America Magazine (@MPAMagazineUS) April 25, 2024
Region among US’s hottest for real estate
Upstate New York has emerged as one of the most coveted areas for real estate in the US, with Redfin reporting in October that Albany, Rochester and Buffalo represented three of the fastest-growing housing markets in the country.
Zillow, meanwhile, predicted at the beginning of the year that Buffalo would become 2024’s hottest market – and for Rankin, based in Latham near Albany, education has been a key component of bringing in business this year.
“I’m a big ‘why’ guy,” he said. “Once I understand how something works, I can execute. I think [you need to] help your clients understand how it all works together – statistically, data-wise, future affordability: ‘Maybe I can pay off this car to reduce my overall expenses. I can afford a little bit higher home, a little bit higher rate.’
“I think that education is what empowers buyers to realize, ‘OK – I buy in at 7% or 7.5% today, but there’s a strong probability my income’s going to grow and then I’ll be able to refinance to 6.5% or 6% or 5.5% down the road. But I need to make sure I qualify at today’s rate, today.”
Amid that continuing strong homebuying sentiment in upstate New York, supply remains scarce – meaning bidding wars and properties selling far over their listed price are prominent realities of the current market.
“We’re still seeing an inventory shortage. We’re still seeing there’s not enough homes for buyers, and we’re still seeing a lot of competition on properties,” Rankin said. “We’re still seeing people waive inspections, and we’re seeing buyers just really struggling with affordability.
“It feels like we’re seeing more and more gift letters than ever. We’re seeing people with generally more debt, and we’re seeing people struggling to stomach the monthly payment for the mortgage.”
First-time homebuyers feeling the strain
Affordability is a big concern for many homebuyers – particularly new entrants to the market, who often see themselves frozen out of the bidding process because of an inability to compete with more established buyers and existing homeowners.
“For our market, everyone’s looking at a home for $300,000. That’s your kind of starter home price,” Rankin said. “And everyone’s in that market. So you’re fishing in an oversaturated area as a buyer, even if you have a low downpayment option. The issue is buyers don’t have a lot of money to put down.
“When you’re competing against people putting more money down, when you’re competing against people waiving inspections... people are waiving inspections when they shouldn’t be waiving them, or going way above the purchase price.”
Sellers, meanwhile, are often more likely to err on the side of caution and go with a more established buyer that reduces risk and maximizes profit on the sale.
“Those first-time homebuyers often don’t have the extra capital to waive inspections and to deal with way above purchase prices and things of that nature,” Rankin said. “So first-time buyers – there are a ton of them out there that just don’t always have the leverage to be successful in the market.”
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