Consumers Dumbfounded By The Future Of U.S. Home Prices
Fannie Mae proves consumers are horribly inaccurate when it comes to guessing what home values will do in the future; an update on today’s mortgage rates and a look at the 5-day interest rate trend; and, data from the National Association of REALTORS® shows homes are now selling at the fastest pace of all-time.
Home Values Rise Twice What Consumers Predict
Home prices change faster than consumers expect.
In a new survey from government-backed mortgage group Fannie Mae, U.S. consumers said they expect home values to rise three-and-a-half percentage points over the next twelve months.
Don’t put faith in public estimates.
Predicting the future is difficult, and consumers have a long history of being wrong about the future of U.S. home prices.
Last May, consumers predicted home values would rise 2.6 percent between then and now. Values climbed nearly three times that amount.
According to the Federal Housing Finance Agency, the National Association of REALTORS®, and about a half-dozen other companies, home values are up an average of seven percent over the last year nationwide; and, in cities including Seattle, Los Angeles, and Las Vegas, values are up 10 percent and more.
Rising home prices can complicate the home buying process — especially for first-time home buyers who currently rent.
When home prices rise:
- Down payment amounts climb (Excepting for 100% mortgages)
- Mortgage loan sizes increase, raising monthly payments
- Home affordability drops, affected household budgets
Additionally, rents often rise to match rising home values, changing the math for buyers who want to know whether it’s better to rent or buy.
Consumers predict future home prices poorly so don’t expect your gut instinct to be much better. Instead, get with a local real estate agent who can help you make sense of the available data.
If you plan to buy a home sometime soon and have the means to make it happen now, you may be better served to take your next step soon.
Today’s Mortgage Rates & Interest Rate Trends
Mortgage rates are falling today.
For buyers of homes and refinancing households, interest rates are down as compared to earlier in the week, boosting home affordability and making refinance options more clear.
Cash-out options are improved, and homeowners with existing FHA mortgage can cancel FHA MIP to save on their monthly payments.
Here’s a look at today’s market action:
- Conforming mortgages: Lower
- FHA mortgages: Lower
- VA mortgages: Lower
- USDA mortgages: Lower
- Jumbo mortgages: Lower
Your specific mortgage rate will vary based on your loan size, your credit score, and how much you’re borrowing.
There are more than a dozen factors that affect your rate so don’t expect the same quote as your neighbor, relative, or friend. However, make sure to shop around.
Mortgage rates and the fees charged vary between lenders. Talk to at least two lenders and find your preferred combination of rates, fees, and service.
Get Today’s Mortgage Rates
Home Selling At Fastest Pace In Recorded History
Homes are selling faster than during any period in recorded history.
According to the National Association of REALTORS®, 58 percent of all homes sold within 30 days of listing, which is making it tough for unprepared buyers in today’s real estate market.
The data comes from the real estate trade group’s Existing Home Sales report, a monthly look at home sales nationwide.
The May 2018 report shows that there are now just 1.85 million home resales available for purchase. At the current pace of sales, the entire stock of U.S. homes would be sold by Halloween.
The typical home now sells in 26 days — also a record.
Today’s home buyers have little time to think. Once you’ve identified a home, the ability to act quickly is a competitive advantage.
The most successful buyers put themselves in position to succeed, and there are three preparation steps for buying a home:
- Get mortgage pre-approved as soon as possible
- Choose a real estate agent to represent you in the transaction
- When you bid, make a strong bid that’s fair to the seller
In a fast-moving real estate market like this one, you may not get a second chance to bid on a home you love, so be prepared and do the work required as a buyer.
Be pre-approved and ready to bid. Otherwise, that home might go to someone else.