Mortgage Rates Plunge: Time to Break Out the Champagne... or Not?

January 24, 2023

Rise and shine! It's a new day and The Shaker is here to serve you the best mix of residential real estate news. Yummy yummy.

What you should know:

Mortgage rates have dropped to their lowest level since September 2020, boosting both homebuyer demand and homebuilder sentiment
The average 30-year fixed rate tumbled to 6.15% this week, compared to last week’s 6.33%. A year ago at this time, the rate averaged 3.56%.
The average rate on a 15-year home loan dropped from 5.52% down to 5.28% this week. This time a year ago, the 15-year fixed-rate was 2.79%.
Analysts warn buyers to keep an eye on the swings of this unstable economy, as mortgage rates are far from the only factor affecting affordability.
Mortgage rates still remain incredibly high compared to last year, creating “financial barriers” for many buyers.

Rising Mortgage Rates and Housing Costs: The Great Relocation of 2022

25% of Redfin.com users looked to move to a different metro area in the fourth quarter of 2022, which is a record high.
The people who are buying homes are relocating at an unprecedented rate because elevated mortgage rates, still-high home prices and economic uncertainty are driving many of them–especially remote workers–to more affordable areas.
But those same factors also caused the overall pool of buyers to shrink, with pending home sales down more than 30% from a year ago at the end of 2022. Many homeowners are also reluctant to move because they don’t want to give up their relatively low mortgage rate.

In 2021 and the first half of 2022, many home sellers made the decision to forgo a real estate agent as the housing market gave them a clear upper hand.
But in 2023 the market conditions have changed, and it could pay to hire a real estate agent this year, even if housing inventory doesn't pick up all that much.
The only real downside to hiring a real estate agent is the fee you'll have to pay. But if you hire a real estate agent who's really great at what they do, that fee might pay for itself.

In a recent interview with the new leader of America’s second-largest city, Los Angeles Times reporters Liam Dillon and Ben Oreskes ran through a “lightning round” of statements that Mayor Karen Bass was supposed to declare true or false.
Bass says that construction of market-rate homes in disadvantaged areas does cause gentrification or displacement but instead prevents it.
Bass’s apparent belief that the opposite is true turns out to be widely held. A recent working paper shows that 30-40% of Americans believe that a large, exogenous increase in their region’s housing stock would cause rents and home prices to rise.
A similar percentage believed that such an increase would cause rents and prices to fall, with the balance predicting no change.

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