By Michael Ardolino
It has been a busy summer. The warmer months can be somewhat slow in real estate. This year the season has been on the robust side.
If the market keeps going in the same direction, the odds are 2021 will end strong.
To answer the popular questions people have been asking, “Are we in a housing bubble? Is the market going to crash and burn?” What experts in the field will tell you is “no” to both.
These are valid questions. Many remember the mid-2000s when borrowers were defaulting on their subprime mortgages, which typically were given to those with low credit ratings. This set off a domino effect because what happens in the real estate market affects the economy overall.
Experts say what increases the chances of remaining more stable than where we were in the mid-2000s is that people can’t get a mortgage as easily now. Banks are looking for buyers with credit scores on the high side who can afford a solid down payment.
It also makes a difference in the market overall when homeowners are refinancing their home, they need to maintain 20% equity. We weren’t seeing that 15 years ago and houses were “underwater,” which means the property value had fallen to the point where the owner had a higher principal than what the home was worth.
Trends from the west
In last month’s column, I advised everyone to keep an eye on the market in Queens. The borough was starting to see a slight shift where more homes were coming to that market and taking a little longer to go to contract.
We are seeing the number of listings increasing in Nassau as well. Queens is still in the lead though showing in the last few months around a 125% increase in listings over last year. Nassau has a more than 50% increase. Here in Suffolk, the listing increase has been in the 30s percentile.
Suffolk County is experiencing the highest percentage of growth in sales on record.
Timing is everything
Experts are still saying this is the time to buy. The Federal Reserve announced on July 28 that interest rates would remain low. This will continue to help buyers and sellers secure a low mortgage rate for the home they have been dreaming about.
Nobody wants to enter into a bidding war for their dream home. There is a benefit to this right now. If you come out the top bidder, while interest rates are still historically low, you will be locked into a payment that is still within your budget despite it being a seller’s market.
In its Primary Mortgage Market Survey released July 29, mortgage professionals Freddie Mac showed that the 30-year fixed-rate mortgages are averaging under 3%.
“As the economy works to get back to its pre-pandemic self, and the fight against COVID-19 variants unfolds, owners and buyers continue to benefit from some of the lowest mortgage rates of all-time,” said Sam Khater, chief economist at Freddie Mac, in a press release.
The real estate market is a dynamic one where potential sellers and buyers need to be aware of trends. We’re watching the trends for you. So, let’s talk.
Michael Ardolino is the Founder/Owner-Broker of Realty Connect USA. Click here for website.