With inflation rising and the Federal Reserve poised for steady hikes, mortgage rates are falling after rapid jumps in June.
The average rate on a 30-year mortgage fell slightly last month to 5.76%, according to the National Association of Realtors.
Interest rates have come down significantly in recent weeks – between half and three-quarters of a percent – totaling thousands of dollars in savings over a year.
What does this mean for the average buyer?
Another $20,000 to $40,000 in buying power that they didn’t have a few weeks ago.
With growing concerns about a possible economic recession and new mortgage applications steadily declining over the past two to three months, mortgage companies are offering more competitive closing costs and interest rates to attract new buyers.
Many borrowers continue to feel the pinch, and some are written off altogether due to the sharp rise in interest rates since the start of the year.
Competition remains strong among those who can afford to buy. According to the Mortgage Bankers Association, this pool is steadily shrinking, with applications falling to their lowest level in 22 years.
Will the housing market continue to “normalize” for the rest of the year?
We believe the housing market will see a deceleration and hopefully no depreciation.
A deceleration is expected due to the flurry of activity such as listings, closures, days on the market, price cuts, expired listings, etc. In terms of home value appreciation, with each passing month that number has reversed.
Last year, homes in Arizona appreciated 20-25%, which was a total anomaly. What our market did last year, in terms of appreciation, is what it did the previous three years combined.
Forecasts in early 2022 called for another 20% appreciation. After the second quarter of the year, the forecast was reduced from 20% to 5%.
Rising mortgage rates, along with the war in Ukraine and inflation in the cost of gas and groceries, have had a significant impact on projected home appreciation values for the rest of the year. ‘year.
All markets are cyclical: real estate,
finance, labor market. The roller coaster can’t always keep going up. The jump in inflation, stock market volatility and
Negative GDP all happened very quickly.
What is the trajectory of the roller coaster?
The recent month-over-month downtrends we’ve seen are as steep as the last market correction. The market is softening and softening fast.
The rate of depreciation that Arizonans will see will be much lower than those who live in a smaller state. With Arizona’s job growth rate, desirable geographic location for retirees and young families, and the general influx of new residents, the housing outlook for Arizona remains strong.
These factors provide enough of a cushion as a local economy and local market to stay afloat.
Shrinking, easing, slowing, slowing…whatever you call it, home value appreciation is not going to rise like last year, or as we initially thought at the start of 2022.
While mortgage and federal interest rates have experienced turbulence this year, we are staying the course and continuing to help our clients navigate the market according to their plans and priorities.
Logan Hall is the Director of Operations, Development and Recruitment at RE/MAX Fine Properties and is in the top 1% of agents worldwide. Information: www.fineprop.com