As we continue to navigate through the unprecedented times due to COVID-19 we are seeing some steady trends start to emerge. While there are still many unknowns our recent local market
The Market We Live In
Considering a Move? Many buyers and sellers often ask the same questions about the current state of affairs that our market is in. A window of opportunity for the residential real estate market is upon us. In fact, this is one of the best times in history for those looking to buy, sell, or refinance a home. Here’s why.
Rates Are Low
Mortgage rates are at their lowest level in nearly 50 years. According to lender Freddie Mac, which began tracking the data in the early 1970s, the average rate on a 30-year mortgage is down to 3.24%, well below its long-term average of 7.98%. The current rate is even below its 2019 average of 3.94%. This presents an attractive opportunity for those wishing to sell, refinance, or purchase a new home.
Prices Are High
The price of an existing home is another plus, especially for those looking to sell. According to the National Association of Realtors, the median sales price of an existing home is at a record high of $286,800. This is $50,000 or 24% above the previous record peak which occurred prior to the 2008 financial crisis. However, prices vary widely by region, as the following table shows.
Inventory Is Low
Home prices are also affected by the number of units available versus the number of people looking to buy. When fewer homes are available, prices tend to rise. This is known as a sellers’ market. Thus, the number of available homes (inventory) is one key to gauging future prices. The good news for sellers is that the current inventory of existing homes is near its lowest point ever at 1.47 million units. For reference, existing home inventory peaked at 4.04 million in July 2007.
Is Now the Time to Act?
If you are selling or refinancing, this is an excellent time to act. If you are looking to buy, it may still be good as rates are low and there are many programs to help first-time home buyers.
How long will this ‘window of opportunity’ last? Mortgage rates are tied to the yield on longer term U.S. Treasuries. As the yield goes, so goes mortgage rates.
If you are planning to sell your home, you have an advantage. With fewer homes on the market, prices are firmer and you’re more likely to receive your asking price. If you’re trying to buy, the good news is that rates are low but, with prices at the high end of the range, you ‘ll need to be selective. For those of you in the refi camp, rates are low and prices are high so you should have more home equity, which helps.
This window will not last forever. If selling, buying, or refinancing a home is a consideration, you should act sooner rather than later. When the economy begins to improve, mortgage rates will likely move higher. This will make home ownership a little less affordable, make it slightly more difficult for sellers, and refinancing will become less beneficial.
About Dan Lorentz, ABR, CRS, Founder & Team Leader of Greater Charleston Properties: Founder and Team Leader of the Greater Charleston Properties Team, Dan Lorentz, has lived in the Charleston, SC ....