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The Main Key To Understanding the Rise in Mortgage Rates

Thursday, October 7, 2021

by Christie Cannon

Every Thursday, Freddie Mac releases the results of their Primary Mortgage Market Survey which reveals the most recent movement in the 30-year fixed mortgage rate. Last week, the rate was announced as 3.01%. It was the first time in three months that the mortgage rate surpassed 3%. In a press release accompanying the survey, Sam Khater, Chief Economist at Freddie Mac, explains:

“Mortgage rates rose across all loan types this week as the 10-year U.S. Treasury yield reached its highest point since June.”

The reason Khater mentions the 10-year U.S. Treasury yield is because there has been a very strong relationship between the yield and the 30-year mortgage rate over the last five decades. Here’s a graph showing that relationship:The relationship has also been consistent throughout 2021 as evidenced by this graph:The graph also reveals the most recent jump in mortgage rates was preceded by a jump in the 10-year Treasury rate (called out by the red circles).

So, What Impacts the Yield Rate?

According to Investopedia:

“There are a number of economic factors that impact Treasury yields, such as interest rates, inflation, and economic growth.”

Since there are currently concerns about inflation and economic growth due to the pandemic, the Treasury yield spiked last week. That spike impacted mortgage rates.

What Does This Mean for You?

Khater, in the Freddie Mac release mentioned above, says:

“We expect mortgage rates to continue to rise modestly which will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year.”

Nadia Evangelou, Senior Economist and Director of Forecasting for the National Association of Realtors (NAR), also addresses the issue:

“Consumers shouldn't panic. Keep in mind that even though rates will increase in the following months, these rates will still be historically low. The National Association of REALTORS forecasts the 30-year fixed mortgage rate to reach 3.5% by mid-2022.”

Bottom Line

Forecasting mortgage rates is very difficult. As Mark Fleming, Chief Economist at First American, once quipped:

“You know, the fallacy of economic forecasting is don't ever try and forecast interest rates and or, more specifically, if you're a real estate economist mortgage rates, because you will always invariably be wrong.”

That being said, if you’re either a first-time homebuyer or a current homeowner thinking of moving into a home that better fits your current needs, keep abreast of what’s happening with mortgage rates. It may very well impact your decision.

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Buyers Taking Big Risks To Win In DFW Housing Market

Tuesday, March 2, 2021

by Christie Cannon

NORTH TEXAS (CBSDFW.COM) – The real estate market in DFW is so competitive, some buyers are taking big risks to make sure their offer is accepted.

“Going to an open house sometimes feels like you’re pulling up to a party,” said Rachel Laviola.

She and Masud Zair have spent the last several weeks looking at available homes near their jobs in Collin County. Neither was prepared for the competition among buyers. “We didn’t expect it to be like, ‘there is one new house every day and if you don’t look at it immediately it will be gone,’” said Zair.

That was the atmosphere outside a home in Frisco recently: vehicles lined the streets while perspective buyers milled around outside, all waiting to take their tour. The home had hit the market hours earlier. Over the next two days it was shown 91 times and the sellers received 39 offers. The winning buyer offered cash with no home inspection and a lightning-fast closing.

Those kind of “extras” are becoming commonplace in Collin County, where inventory is at historic lows.

“There’s just so many people trying to buy a house,” said real estate agent Katherine Meyers. “[There are] dozens and dozens of offers on pretty much every house in the area – it doesn’t matter the price range.” She says the most popular homes these days are within the Frisco ISD and Prosper ISD boundaries.

So how are buyers trying to stand out? “Free lease-backs, no home warranties, paying title feels, appraisal waivers,” said Meyers. The waivers mean if the home appraises for less than the offer, the buyer will pay the difference in cash. “It’s being used pretty much every time there are multiple offers,” said Meyers. “It almost has to be done if you want a chance at it.”

The market for new homes is just as hot. Real estate agent Marie Bailey is based in Collin County; she says builders there are selling lots faster than they can put up homes.

“Not only is the inventory going away – they are raising the prices every week,” said Bailey. “So I have clients that are on the cusp of a price range, that I say, ‘look, I can do all this research but in two days they could raise the price by $25,000.’”

Some of her clients put down money to claim a lot, even though they won’t know how much the home itself will cost until the builder is ready to start construction. “By the time they’re allowed to take a contract, the price could go up,” said Bailey. “And we don’t even know what the price could go up by.”

t’s not just North Texas. Homes across the state are selling faster, and for more money.

“It’s surprising, to be honest with you, how strong the housing market has been.” Dr. Luis Torres is a research economist for the Texas A&M Real Estate Center. He says the market broke records in 2020 not despite the pandemic, but because of it.

He says with more people working from home and not commuting, the suburbs are expanding.

Many buyers are coming from states with tighter COVID restrictions.

On top of all that, interest rates remain low.

Torres says the biggest challenge the market will face this year will be keeping up with demand. “The biggest headwind that is probably going to hold down the housing market is if we don’t get new listings, new supply,” said Dr. Torres. “That’s going to play a big role going forward.”

For buyers who want to sign on the bottom line, it leaves little choice but to go all in. “Just do it,” said Zair. “Because you really don’t have any leverage at all in this type of market.”

How hot was the 2020 housing market in your area? Search your ZIP code to see how many homes sold last year and the average price per square foot.

Article provided By Brooke Katz with CBS DFW See the entire article HERE.

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Winning as a Buyer in a Sellers’ Market

Monday, December 14, 2020

by Christie Cannon

Winning as a Buyer in a Sellers’ Market

Winning as a Buyer in a Sellers’ Market [INFOGRAPHIC] | MyKCM

Some Highlights

Buying a home in today’s sellers’ market doesn’t have to feel like an uphill battle.
Here are four ways to make sure you’re positioned for success when making a home purchase, even when the scale tips toward sellers.
Let's connect to make sure you're armed for victory in the housing market this season.

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How Does the supply of homes for Sale Impact Buyer Demand?

Monday, September 30, 2019

by Christie Cannon

How Does the Supply of Homes for Sale Impact Buyer Demand?

The price of any item is determined by supply, as well as the market’s demand for the item. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between seller traffic (supply) and buyer traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”The darker the blue, the stronger the demand for homes is in that area. The survey shows that in 3 of the 50 U.S. states, buyer demand is now very strong; only 2 of the 50 states have a ‘weak’ demand. Overall, buyer demand is slightly lower than this time last year but remains strong.

Seller Supply

The index also asked: “How would you rate seller traffic in your area?”As the map below shows, 18 states reported ‘weak’ seller traffic, 29 states and Washington, D.C. reported ‘stable’ seller traffic, and 3 states reported ‘strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the buyers who are looking for homes.

Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together to help you capitalize on the demand in our market now.

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5 Reasons To Sell This Fall

Wednesday, September 4, 2019

by Christie Cannon

5 Reasons to Sell This Fall

Below are 5 compelling reasons listing your home for sale this fall makes sense.

1. Demand Is Strong

The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing, and able to purchase…and are in the market right now. More often than not, in many areas of the country, multiple buyers are competing with each other to buy the same home.

Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing inventory is still under the 6-month supply that is needed for a normal market. This means that in the majority of the country, there are not enough homes for sale to satisfy the number of buyers.

Historically, a homeowner would stay an average of six years in his or her home. Since 2011, that number has hovered between nine and ten years. There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years due to a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.

Many homeowners were reluctant to list their homes over the last couple years, for fear that they would not find a home to move to. That is all changing now as more homes come to market at the higher end. The choices buyers have will continue to increase. Don’t wait until additional inventory comes to market before you decide to sell.

3. The Process Will Be Quicker

Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and simpler, as buyers know exactly what they can afford before shopping for a home. According to Ellie Mae’s latest Origination Insights Report, the time needed to close a loan is 43 days.

4. There Will Never Be a Better Time to Move Up

If your next move will be into a premium or luxury home, now is the time to move up. There is currently ample inventory for sale at higher price ranges. This means if you're planning on selling a starter or trade-up home and moving into your dream home, you’ll be able to do that in the luxury or premium market.

According to CoreLogic, prices are projected to appreciate by 5.2% over the next year. If you’re moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage) if you wait.

5. It’s Time to Move on with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to these questions. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

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