Mortgage Rates Set Another Long-Term Low…
Not only have mortgagees been able to move lower over the past 4 days, but they’ve done so even as Treasury yields remained flat.
Numbers dropped drastically from last summer
Reaching a historic new low, only 10.4% of offers on homes written by Redfin agents in August faced a bidding war. Last month, that number was 11.4%. Last year, that number was at 42%.
U.S. annualized home prices probably will jump 5.4% by July 2020, according to forecast
Low mortgage rates coupled with a scarcity of inventory are driving gains in home prices because lower financing costs mean borrowers can qualify for bigger mortgages. A shortage of homes for sale, especially in lower-price segments of the market, are giving sellers the opportunity to hold out for the prices they want.
Also supporting home-price gains is an increase in U.S. household income, said Frank Nothaft, CoreLogic’s chief economist. The unemployment rate was 3.7% in July, near May’s 3.6% that was lowest level since the 1960s. That’s forcing employers to pay higher wages to keep good workers. The U.S. median annual household income in June was 1.8% higher than a year earlier, according to a report from Sentier Research based on inflation-adjusted Census Department data.
Company says it will help with transparency
Redfin announced Thursday that the commissions of buyer’s agents will now be published on some of the company’s real estate listings, because the company believes that being transparent with commission will help the customer better understand the transaction. The commission will be displayed in the property detail section where the home is listed.
It’s all part of a plan to become a one-stop shop for all things buying and selling a home.
Real estate technology startup Opendoor announced Thursday that it’s launching a mortgage division called Opendoor Home Loans in Arizona and Texas, with plans to expand to other markets in the coming months.
The pilot program has been underway in Texas for a few months. Opendoor says closing on a home typically takes about 45 days, but early results from the pilot program showed Opendoor Home Loans shortened the closing process to an average of 27 days.
Aspiring buyers hoping that home prices will crash, like they did during the Great Recession, are likely in for a rude awakening. There simply aren’t enough homes being built to satisfy the hordes of buyers. And with more members of the giant millennial generation wanting single-family homes in which to raise their growing families, there isn’t likely to be a drop-off in demand anytime soon.
The 2008 recession yielded housing bargains in subsequent years. Curbed’s data reporter explains why that won’t be the case for the next one.
Also keep in mind historic precedent: As far as home prices dropping in the wake of recession, 2008 is the exception to the rule. During two mild recessions in the early 1980s, for example, home prices actually increased, just as they did in the early 2000s after the dot-com bust. Home prices are less responsive to recessions because housing is an absolute need, and because buyers tend to come from better financial situations that aren’t as damaged by a recession.
America may or may not be lurching towards a recession now. For the time being employment and output continue to grow. But in the corners of the economy where trouble often rears its head earliest, there are disconcerting portents.
Thanks for reading!