Real Estate Market Update

Published on

September 2024 

Mortgage Rates Expected to Trend Downward
Mortgage rates dropped in August as a weaker jobs report fueled expectations of a Fed rate cut. While the Fed doesn’t directly set mortgage rates, its decisions influence the 10-year Treasury yield, which mortgages tend to follow. If you’re ready to buy or sell, monitor rates regularly to find the best lender, but don’t try to time the housing market. Mortgage rates are expected to trend downward in the coming months and into next year, as the Federal Reserve is widely anticipated to cut interest rates multiple times. Experts predict a consistent decline in 30-year fixed mortgage rates.

According to Bankrate, 47% of homeowners would only feel comfortable buying a home in 2024 if rates drop below 5%. For homeowners considering refinancing, the recommendation is to start exploring options when you can shave off at least 0.5-0.75 percentage points from your current rate.

 Mortgage rates mostly fell compared to last week, Bankrate reports:

  • 15-year fixed rates dropped from 5.76% to 5.68% 
  • 5/1 ARM rates decreased from 6.09% to 5.99% 
  • Jumbo mortgage rates declined from 6.57% to 6.54% 
  • 30-year fixed rates stayed at 6.38%
Investor Home Purchases on the Rise
Investors bought 1 of every 6 U.S. homes for a total of $43 Billion
A new Redfin report shows investors are buying more affordable homes. This makes it harder for first-time buyers to find a home. Investors bought 24.1% of low-priced homes in the second quarter of 2024. 
 
This is up from 22.7% last year. They are buying these homes because of high rental demand, cash payments, and potential profits!
Key findings from the report
Investor activity is increasing: Investor home purchases rose 3% year-over-year in the second quarter, driven by strong demand from renters.
Investors are targeting affordable homes: Investors bought 24.1% of low-priced homes in the second quarter, up from 22.7% a year earlier.
Total value of investor purchases: Investor home purchases totaled $43 billion in the second quarter.
Rising home prices: The national median cost of buying a house increased by 4.9% from a year prior.
Regional trends: San Jose and Las Vegas saw the highest growth in investor home purchases.
Investors are increasingly buying affordable homes due to several factors
Elevated home prices and rising mortgage rates have made homeownership difficult for many Americans, driving up demand for rentals. This has created a favorable environment for investors who can afford to pay in cash and avoid high mortgage rates. 

 Additionally, investors are attracted to affordable homes because of their potential for significant value increases. Especially in markets with limited housing supply and strong demand!