Numbers Count: Housing snapshot looks bright
Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.The numbers: As of mid-April, the national average for the 30-year fixed mortgage rate was 3.58%, according to Freddie Mac’s April Housing Outlook, which goes on to point out this is the lowest rate since May 2013. Despite economic weakness, the report forecasts that housing will maintain its momentum in 2016. What counts: Mortgage rates have slid down to spring 2013 levels. Back then, however, remember that average home prices were shooting up; it felt like you couldn’t walk from one open house to the next without prices rising in the meantime. In fact, in May 2013, average home prices had risen 12% from a year earlier – with homebuyers in several big cities, including Atlanta and Los Angeles, coping with increases of 20% or more, according to the Case Shiller Home Price Index.
Fast forward to today, and the frenzied pace of appreciation is gone, for the most part. The most recent Case Shiller Index showed about a 5% increase in February for home prices. Welcome relief for the open house browsers everywhere but fast-moving Portland, Seattle, and San Francisco where prices have climbed 9-12% from a year ago.
The combination of historically low mortgage rates and moderate home appreciation is practically a Goldilocks housing market for potential buyers. Inventories are still tight, but gradual appreciation means shoppers may be able to take more time to find the home they love, and low rates mean there may be opportunities for first-time homebuyers. Also, current homeowners may be able to afford that bigger move-up home they’ve been wanting.