By Tim McLaughlin, Senior VP, Weichert Financial
If you’re waiting for mortgage rates or house prices to hit bottom, you may have delayed too long. Among the housing trends you can expect to see this spring: potential homebuyers will find increased competition when shopping for a home, as more bargain hunters get off the fence. Also, investors will continue to take advantage of the opportunity to buy low.
Rising mortgage rates will serve as a warning to borrowers who thought the low rates would last forever. However, there may be some bad news in there as well: Some mortgages will cost more this spring because of higher loan fees being implemented by Fannie Mae and Freddie Mac as the year progresses.
Buyers Face Fierce Competition With Investors:
Attractive mortgage rates, low home prices and rising rents make the current housing market the perfect opportunity for investors. When looking for bargains, homebuyers will continue to compete with investors. “This is true particularly at the lower end of the market and with first-time homebuyers” says Jed Smith, MD of quantitative research for the National Association of Realtors.
Homebuyers Are Expected to Get Off the Fence:
Homebuyers waiting for prices to hit bottom are getting off the sidelines, industry experts say. “We’re starting to see a significant pick up on the purchase side,” says Ed Conarchy, a mortgage planner. “I don’t think you’ll go back to (the home purchase activity we had in) ’06, but this is the best that we have seen in a long, long while.”
The price gap is closing between what sellers expect to get for their homes and what buyers pay, says Jay Brinkmann, chief economist and senior vice president of research for the MBA. That’s one reason home sales are improving.
The trend has already started, according to a recent study by Kingsley Associates, a San Francisco based real estate research and consulting firm. About 59.5% of the tenants surveyed in the study said they intend to renew their leases this year. That is the lowest rate since early 2009 on renters’ intention to renew leases. The rate was 63.7% in 4Q11. Fewer renters should equate to more buyers.
Looking to spring into action and take advantage of near historically low rates? Ask us how…we can help!