Low mortgage rates are making headlines. And that bodes well for the San Francisco Bay Area’s real estate market.
Healthy Housing Market
Black Knight, a mortgage industry software provider, reported their May payment-to-income ratio by state. Income ratios have dropped to the lowest level in a year — aided by lower interest rates and rising incomes. The result? It’s a great time for homebuyers.
Low Mortgage Rates Mean More Home Buying Power
The Fed cut interest rates for the first time since 2008. Yet it’s important to understand that The Fed doesn’t set mortgage rates; it determines the federal funds rate which impacts short-term and variable interest rates. According to the Mortgage Daily News, mortgage rates dropped to new multi-year lows. That’s excellent news for buyers.
Tracie Southerland of Opes Advisors shared the following chart with me. It shows when mortgage rates rise, buying power can decrease. With rates at an attractive low — like they are now — it means that would-be buyers can afford more house for the same payment.
53.5% of borrowers received rates under 4.25%, according to HousingWire. Lower rates translate into significant savings over the life of a mortgage loan.
The Mortgage Knowledge Gap
Many would-be homeowners are uncertain or mistaken about what’s required to get a mortgage, according to a Fannie Mae National Housing Survey. It’s not uncommon for consumers overestimate the minimum credit score and down payment necessary to qualify for a home loan.
Don’t let lack of information or misinformation keep you from homeownership. With over 15 years as a Realtor in the SF Bay Area, I have relationships with several local lenders that can help you.
More Inventory Means More Buying Choices
Inventory in May and June passed the 1,400 mark for active listings. Compared to April 2019, the number of homes for sale increased by 200; the gap is even larger (400) when comparing May 2018. In looking at the market stats, I’ve seen:
- More active inventory than previous periods, which translates into more choices for buyers.
- The average Days on Market (DOM) is up. On average, homes took 10 days longer to secure a signed contract than compared to May 2018.
- Sellers are receiving slightly above list price, 102% compared to last year’s 111%.
Buying Or Selling Remains a Personal Decision
Whether you’re looking to buy or sell, you need an experienced guide in this complex and fast-paced real estate market. I’ve helped hundreds of individuals just like you successfully negotiate the most important financial transaction you’ll ever make. Contact me today to get started.