Great news for home buyers and owners! Mortgage rates have been steadily declining, offering fantastic opportunities to lock in excellent rates. Homeowners are also finding it more affordable to refinance, which can significantly help their long-term budgets.
So, what does this mean for the overall housing market? While some might feel uneasy given past economic events, the outlook isn't as bleak as it seems. Let's dive in!
Hope for the 2019 U.S. Housing Market
This recent dip in mortgage rates is a continuation of a downward trend that began in late 2018, according to Freddie Mac. They're feeling positive about the current situation:
"Wages are growing on par with home prices for the first time in years, and with more inventory available, spring home sales should help the market to recover from the malaise of the last few months."
Many market observers share this optimistic view for the U.S. housing market. After a period of tepid demand, higher interest rates, and significant market demand, this positive outlook is a welcome change. With less need for traditional home loans, lenders are increasingly turning to "unconventional mortgages." These might not require proof of income and could be offered to buyers with less-than-perfect credit.
While these high-interest mortgages contributed to the 2007 financial housing crisis, they appear to pose less of a threat in today's market. However, the drop in mortgage rates does create some uncertainty for certain types of buyers.
Rates Deal Hot and Cold Blows to the Housing Market
Before their recent drop, mortgage rates saw a nearly 5% increase in the second half of 2018. Now, with borrowing rates falling and likely to remain low for a while, there's renewed hope for the housing market's future. Benjamin Keys, a Wharton real estate professor, sees this as a positive development, as borrower demand increases.
Things are still somewhat uncertain, with brokers cautiously optimistic. While house demand looks good, it could be impacted by the "shallow unemployment rate and the booming labor market," as Keys notes. Additionally, the positive signal of lower mortgage finance rates has yet to fully translate into the latest buying trends.
Real estate economists are still watching to see which direction the U.S. housing market will take. Observing these fluctuations will provide valuable insight. So far, the current U.S. economic expansion shows promising signs for the housing market.
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