By: Dan Brown
2017 has been a year of many ups and downs nationwide. The economic, political, and social changes taking place have required many industries to make adjustments. The mortgage and housing industries have had their own set of challenges during this time, and it’s important for homebuyers to be aware of these challenges in order to avoid surprises and more easily navigate the home-buying process. Our Kelly Team at Envoy Mortgage is here to help you understand the current state of the market before you make any big-time housing or mortgage decisions. Here what you need to know:
Home prices hit their limit
During 2017, there has been a common theme within the housing and mortgage industries: Demand is rising but inventory is slim. Because so few homes have been for sale, prices have skyrocketed. After hitting a new pricing peak in March, the rate of home prices has fallen bit by bit each month since. However, prices remain nearly 6 percent higher than they were a year ago, nationally. These steep prices are still hard to handle for hopeful home-buyers. According to Lawrence Yun, chief economist for the National Association of Realtors, “Higher home prices and a limited inventory of affordably priced homes will likely keep holding back some renters who would prefer to be homeowners.”
Inventory has fallen
Inventory of new or existing homes has fallen for 26 consecutive months. This is driving intense competition among home buyers, with over half of the homes on the market selling in less than a month. While low supply may seem like an opportunity for homebuilders, they are simply unable to build the inexpensive housing that the market needs. The cost of land, labor, and materials are forcing builders to stick with the higher priced housing they are producing, instead of providing affordable inventory for our nation’s majority. In August, just 2 percent of the newly built homes that were sold were under $150,000 and only 14 percent were priced under $200,000.
Mortgage applications fall
Normally after Labor Day, home buying typically picks up as buyers rush to take advantage of lower interest rates. The beginning of the fall’s housing market should be providing a nice increase in mortgage business, but not this year. A rise in mortgage interest rates have had the biggest effect on applications for home loans. Mortgage applications fell 4 percent recently and are nearly 36 percent lower than a year ago, when interest rates were lower. Again, increased home prices and low inventory are forcing home buyers to step back from the home-buying process.
While the state of the industry may seem bleak, there’s no need to be alarmed. Our team at Kelly Mortgage can help you explore your options and find the best fit for your situation and the current market. Contact us for help regarding your mortgage needs today!