Mortgage applications to purchase a home rose 5% for the week and were a remarkable 33% higher than a year ago, according to the Mortgage Bankers Association’s index.
With home prices continuing to rise, the low mortgage rates are giving buyers much-needed help. The average mortgage rate fell to 3.03% for the week ending July 9, the lowest 30-year fixed-rate number since Freddie Mac began tracking the statistic in 1971. [MBA]
Joel Kan, an MBA economist noted that “the average purchase loan size increased to $365,700 — also another high — as borrowers contend with limited supply and higher home prices.” Redfin reported that 54% of their offers in June engaged in bidding wars, contributing to price gains.
“Bidding wars continue to be fueled by historically low mortgage rates and fewer homes up for sale than almost any time in the last two decades,” said Redfin economistTaylor Marr. “It’s like a game of musical chairs where only the best bidders get a seat.
Interestingly, renters and move-up buyers that have held on to their jobs are the ones vying for the small number of single-family homes on the market as they realize they need more space for their families.
We've got record low rates, mortgage apps up, and prices escalating. What does the market need now? Inventory!
The number of homes for sale nationwide in June was down 21.3% from the year before, bringing inventory down to its lowest level since at least 2012 on a seasonally adjusted basis. The number of new listings was down 12% year over year. [REDFIN]
Sellers don’t want homes to be on the market any longer than necessary because of COVID-19, so they’re setting offer deadlines, which create a frenzied, competitive atmosphere.
So where are the buyers?
A Record 27% of Homebuyers Are Looking to Relocate, as Pandemic Accelerates Trend Toward Affordable, Less Dense Areas
According to Redfin, searches for homes in small towns are surging on the Redfin.com website: Pageviews of homes in towns with fewer than 50,000 residents were up 87% year over year in May.
This is huge right?
Well, as a marketer Pageviews are a great indicator of interest but don't actually show if the interest is translating into conversions.
Between the pandemic and the work-from-home opportunities that come with it is accelerating migration patterns that were already in place toward relatively affordable parts of the country.
Home searchers are looking to leave New York, San Francisco, and Los Angeles. Manhattan has now reached its highest vacancy rate in nearly 14 years of being tracked. Manhattan has also seen the lowest number of June new lease signings in 10 years, dropping by 35.6%, making listing inventory soar to a record 84.7%. [HOUSINGWIRE]
According to a new report from Douglas Elliman, “The state mandate that prevented real estate brokers to physically show property was removed before the last week of the month, not enough time to have a material influence on market conditions for the month."
As you can see, buyer traffic is piping hot in six states and pretty strong throughout most of the country—a great sign for sellers.
So, if you're thinking of selling - do your research, get in touch with an agent and get that home on the market. In this turbulent 2020, we don't know how the next headline will affect home buying or consumer confidence.