Why things could heat up in the coming months
Surging interest rates and property values helped quell the US’s pandemic housing boom last year – but a dip in mortgage rates, and the prospect of lower borrowing costs down the line, have sparked speculation that a housing market resurgence could be on the way.
The 30-year fixed-rate mortgage slid six basis points to 6.63% last week, down from a high of 7.79% at the end of October, with observers including Freddie Mac chief economist Sam Khater anticipating further imminent declines.
That prospect, coupled with robust job and income growth and an economy that continues to roar in the face of high rates, should “provide strong fundamental support to the market in the months ahead,” Khater said following the latest news on mortgage rates.
The US economy added 353,000 jobs in January, surging past market expectations as wages jumped and the unemployment rate held steady.https://t.co/OdIwbWYNgI#breakingnews #mortgageindustry #marketupdates #labormarket #economy
— Mortgage Professional America Magazine (@MPAMagazineUS) February 2, 2024
Signs are pointing to a more intense spring mortgage market than witnessed in 2023. Yury Shraybman (pictured top), a Philadelphia-based broker with Innovative Mortgage Brokers, told Mortgage Professional America that he was gearing up for a busy next few months, with activity set to remain elevated throughout the year compared with the 12 months prior.
“I’m thinking that this year, the volume should pick up significantly. I’m expecting the rates to drop just like everybody else,” he said. “Supply is going to remain the same, but the demand is going to change. And right now, with the spring market, I already see the demand increasing.”
An uptick in purchase queries has been apparent since the beginning of the year, Shraybman said, with that spiking demand bringing the potential for feverish competition and multiple offers on properties if things heat up further.
“I think as the spring market gets busier and busier, that demand is going to be much higher – and people are going to go back to getting many different offers [on their properties],” he said. “Right now in my area, people are getting maybe three to five offers on a house. In springtime, I think there’s going to be a lot more than that [with] people overbidding and things like that.”
Market remains resilient despite challenges of 2023
The trend of prospective buyers upping their bids substantially amidst scores of competing offers was a familiar one during the pandemic, when low interest rates and pent-up savings helped spur a homebuying surge across the country.
That red-hot market may be a thing of the past, but that’s not to say things have gone completely cold, according to Shraybman.
“There were a lot of competing offers, a lot of cash offers [during the pandemic]. It’s still a trend, just not as much right now,” he said. “It’s definitely slowed down. But properties are not on the market for a very long time, as long as they’re priced correctly.
“Sometimes if they’re not priced correctly, they can obviously be on the market for a while, but being priced correctly I don’t think that homes are sitting on the market for long at all.”
Where are US home prices headed this year?
Despite a cooler market as a result of those rocketing mortgage rates in 2023, there was little relief for would-be buyers on the home price front last year.
November marked the first time in 10 months that the average US home price fell, the latest S&P CoreLogic Case-Shiller Home Price NSA Index showed, as both the national index and 20-City Composite dipped by 0.2%.
As the market picks up pace in 2024, prices are expected to jump by 3.7% by the end of the year, according to Zillow – and for Shraybman, that means Americans who are in a position to buy shouldn’t hesitate before jumping into the market.
“I personally think that right now is the best time. It’s like that famous joke that yesterday was the best time to get into the market and today’s the second-best time,” he said.
“I think that right now if people don’t buy and they keep on waiting, the prices are only going to go up higher. If the rates are expected to decrease, that’s going to be another reason to skyrocket the price.”
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