Let’s Talk … Real Estate: Now is the time to act
By Michael Ardolino
In last month’s column, we talked about the importance of keeping an eye on the news regarding real estate trends. I mentioned Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen appeared before a Senate panel on Sept. 28 to testify in a hearing about economic recovery.
Fortunately, the Senate passed a temporary extension of the debt ceiling, which allows the government enough funding until December.
Aftereffects
Decisions like this affect the housing market. When the debt ceiling isn’t raised, interest rates and mortgage rates rise, which influences mortgage rates and in turn new homebuyers and sellers.
There has been a slight increase in mortgage rates. According to Freddie Mac, early in October rates passed 3%. What experts do is watch the U.S Treasury yield when they predict mortgage rates because there is a strong correlation between the yield and the 30-year mortgage rate.
Sam Khater, chief economist at Freddie Mac, said, “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.”
Trends
Homeowners for months have enjoyed an attractive year-to-year home price appreciation due to not enough homes on the market. Findings from sources such as FHFA, CoreLogic and S&P/Case Shiller back this up.
Bill McBride, who writes the blog Calculated Risk, said recently that his “sense is the Case Shiller National Annual Growth Rate of 19.7 percent is probably close to a peak. And year-over-year price increases will slow later this year.”
When mortgage rates rise, we usually see changes such as house prices and the length of time it takes a home to sell. Trends are showing the market will slow down slightly in the final quarter of the year.
Analyst expert Ivy Zelman has said that “closings are set to decline roughly 10 percent year over year in the second half of 2021 and home price appreciation is on the cusp of flipping to a decelerating trend.”
What we as real estate experts are talking about is not depreciation. Decelerating at this time means increased home price appreciation at a slower or more moderate rate. This moderate rate, experts believe, will continue into the next year.
Takeaway
We’re seeing this trend around the country. If you’re planning on moving or downsizing to an area that was once considered in demand, make sure to talk to a real estate agent in the town you’re planning to move to, and they can tell you what the current trends are in their market.
The time is now while the housing market is still up. While things are trending slightly to higher interest rates, prices are really good, and the housing market is changing at a moderate pace. Now is the time to get the most for your investment or lock in a fantastic mortgage rate. So … let’s talk.
Michael Ardolino is the Founder/Owner-Broker of Realty Connect USA.
