Are Interest Rates Expected to Rise Over the Next Year?
Buying a home in Raleigh Durham has never been better when it comes to interest rates! The competition and lack of inventory…not so great! But the low interest rates have really made it more possible for people interested in buying a home in Raleigh or Durham!
So far this year, mortgage rates continue to hover around 3%, encouraging many hopeful homebuyers to enter the housing market. However, there’s a good chance rates will increase later this year and going into 2022, ultimately making it more expensive to borrow money for a home loan. Here’s a look at what several experts have to say. This will impact nationally and locally for those looking to buy a home in Raleigh Durham or elsewhere.
“Our long-term view for mortgage rates in 2021 is higher. As the economic outlook strengthens, thanks to progress against coronavirus and vaccines plus a dose of stimulus from the government, this pushes up expectations for economic growth . . . .”
“In 2021, I think rates will be similar or modestly higher . . . mortgage rates will continue to be historically favorable.”
“We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”
If you’re planning to buy a home in Raleigh Durham, purchasing before mortgage interest rates rise may help you save significantly over the life of your home loan! We are Cindi & Zach Honeycutt, your favorite Raleigh Durham realtors! We would be honored to work alongside you on your raleigh durham home search!
The Honeycutts, Movil Realty, 919-730-0777 call or text anytime!
82,338 Great Reasons to Buy a Home Today
Taking a Look at the national & Raleigh Durham Real Estate Market
The financial benefits of buying a home as compared to renting one are always up for debate. However, one element of the equation is often ignored – the ability to build wealth as a homeowner.
Most experts are calling for home prices to continue appreciating over the next several years. The most recent Home Price Expectation Survey, a survey of over one hundred economists, real estate experts, and investment and market strategists, expects home appreciation to increase as follows:
- 2021: 6%
- 2022: 4.5%
- 2023: 4%
- 2024: 3.6%
- 2025: 3.5%
Using their annual projections, the graph below shows the equity build-up a purchaser could earn, using a $350,000 home as an example:A homeowner could increase their net worth by over $80,000 in five years. That’s an average of $16,000 annually. That number should be in any equation determining the financial benefits of owning a home compared to renting.
These are national averages. When we take a look at the Raleigh Durham real estate numbers, things look even better!
The average sales price of a Raleigh Durham home from 2020 to 2021 increased by 13% in just one year! From March 2019 to March of 2020, there was an increase of 5.6% in average sales price. If we don’t even take this years unprecedented bumber of 13%, year over year sales price increases are much higher than the national average. Meaning, your household wealth factor is greatly higher after only a couple of years!
Homeowners are going to make a substantial amount of money in home equity over the next five years buying a home in Raleigh Durham. If you’re ready to buy a home in the triangle, let’s connect so you can enjoy this great benefit as well!
We are Zach & Cindi Honeycutt. Raleigh Durham real estate agents working to give you the benefit of 2 agents instead of 1! Give us a call anytime for a no strings buying or selling consultation.
The Honeycutts, Realtors, Movil Realty, 919-730-0777
How to Be a Competitive Buyer in Today’s Raleigh Durham Housing Market
- With so few houses for sale today in the triangle, it’s important to be prepared when you’re ready to buy a home.
- Meeting with your lender early, knowing your must-haves and nice-to-haves, preparing for a bidding war, and keeping your emotions in check are all ways to gain confidence in the homebuying process. If you need a recommendation for a great lender, let us know! We’d be happy to help you get connected wiht someone who can provide you great service.
- If you’re looking for an expert guide to help you navigate today’s lightning-fast Raleigh Durham housing market, let’s connect today!
Zach and Cindi Honeycutt, Realtors, Movil Realty, 919-730-0777
Spring is almost here, and many are wondering what it will bring for the Raleigh Durham housing market. Even though the pandemic continues on, it’s certain to be very different from the spring we experienced at this time last year nationally. Here’s what a few industry experts have to say about the national housing market and how it will bloom this season.
“Despite early weakness, we expect to see new listings grow in March and April as they traditionally do heading into spring, and last year’s extraordinarily low new listings comparison point will mean year over year gains. One other potential bright spot for would-be homebuyers, new construction, which has risen at a year over year pace of 20% or more for the last few months, will provide additional for-sale inventory relief.”
“Some people will feel comfortable listing their home during the first half of 2021. Others will want to wait until the vaccines are widely distributed. This suggests more inventory will be for sale in late 2021 and into the spring selling season in 2022.”
“Since reaching a low point in January, mortgage rates have risen by more than 30 basis points… However, the rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”
“As the housing market heads into the spring home buying season, the ongoing supply and demand imbalance all but assures more house price growth…Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”
The experts are very optimistic about the housing market right now! And we are optimistic about the local market here in Raleigh Durham. If you pressed pause on your real estate plans over the winter, let’s chat to determine how you can re-engage in the homebuying process this spring in the triangle! We would be honored to be your Raleigh Durham real estate agents! Call us or text us anytime, or connect with us on social media by searching @thehoneycuttrealtors
Zach and Cindi Honeycutt, Raleigh Durham Realtors, Movil Realty, 919-730-0777
Are we in a housing bubble in the Raleigh Durham Real Estate Market? Our answer- no! Here is why!
Home values appreciated by about ten percent nationally in 2020, and they’re forecast to appreciate by about five percent this year. This has some voicing concern that we may be in another housing bubble like the one we experienced a little over a decade ago. Here are three reasons why this market is totally different.
1. This time, housing supply is extremely limited
The price of any market item is determined by supply and demand. If supply is high and demand is low, prices normally decrease. If supply is low and demand is high, prices naturally increase.
In real estate, supply and demand are measured in “months’ supply of inventory,” which is based on the number of current homes for sale compared to the number of buyers in the market. The normal months’ supply of inventory for the market is about 6 months. Anything above that defines a buyers’ market, indicating prices will soften. Anything below that defines a sellers’ market in which prices normally appreciate.
Between 2006 and 2008, the months’ supply of inventory increased from just over 5 months to 11 months. The months’ supply was over 7 months in twenty-seven of those thirty-six months, yet home values continued to rise.
Months’ inventory has been under 5 months for the last 3 years, under 4 for thirteen of the last fourteen months, under 3 for the last six months, and currently national averages stands at 1.9 months – a historic low. And in Raleigh Durham, that bumber is 0.9 months of inventory! So our supply is even lower than the national average.
Remember, if supply is low and demand is high, prices naturally increase.
2. This time, housing demand is real
During the housing boom in the mid-2000s, there was what Robert Schiller, a fellow at the Yale School of Management’s International Center for Finance, called “irrational exuberance.” The definition of the term is, “unfounded market optimism that lacks a real foundation of fundamental valuation, but instead rests on psychological factors.” Without considering historic market trends, people got caught up in the frenzy and bought houses based on an unrealistic belief that housing values would continue to escalate.
The mortgage industry fed into this craziness by making mortgage money available to just about anyone, as shown in the Mortgage Credit Availability Index (MCAI) published by the Mortgage Bankers Association. The higher the index, the easier it is to get a mortgage; the lower the index, the more difficult it is to obtain one. Prior to the housing boom, the index stood just below 400. In 2006, the index hit an all-time high of over 868. Again, just about anyone could get a mortgage. Today, the index stands at 122.5, which is well below even the pre-boom level.
In the current real estate market, demand is real, not fabricated. Millennials, the largest generation in the country, have come of age to marry and have children, which are two major drivers for homeownership. The health crisis is also challenging every household to redefine the meaning of “home” and to re-evaluate whether their current home meets that new definition. This desire to own, coupled with historically low mortgage rates, makes purchasing a home today a strong, sound financial decision. Therefore, today’s demand is very real.
Remember, if supply is low and demand is high, prices naturally increase.
3. This time, households have plenty of equity
Again, during the housing boom, it wasn’t just purchasers who got caught up in the frenzy. Existing homeowners started using their homes like ATM machines. There was a wave of cash-out refinances, which enabled homeowners to leverage the equity in their homes. From 2005 through 2007, Americans pulled out $824 billion dollars in equity. That left many homeowners with little or no equity in their homes at a critical time. As prices began to drop, some homeowners found themselves in a negative equity situation where the mortgage was higher than the value of their home. Many defaulted on their payments, which led to an avalanche of foreclosures.
Today, the banks and the American people have shown they learned a valuable lesson from the housing crisis a little over a decade ago. Cash-out refinance volume over the last three years was less than a third of what it was compared to the 3 years leading up to the crash.
This conservative approach has created levels of equity never seen before. According to Census Bureau data, over 38% of owner-occupied housing units are owned ‘free and clear’ (without any mortgage). Also, ATTOM Data Solutions just released their fourth quarter 2020 U.S. Home Equity Report, which revealed:
“17.8 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value…The count of equity-rich properties in the fourth quarter of 2020 represented 30.2 percent, or about one in three, of the 59 million mortgaged homes in the United States.”
If we combine the 38% of homes that are owned free and clear with the 18.7% of all homes that have at least 50% equity (30.2% of the remaining 62% with a mortgage), we realize that 56.7% of all homes in this country have a minimum of 50% equity. That’s significantly better than the equity situation in 2008.
This time, housing supply is at a historic low in the triangle and also nationally. Demand is real and rightly motivated. Even if there were to be a drop in prices, homeowners have enough equity to be able to weather a dip in home values. This is nothing like 2008. In fact, it’s the exact opposite. No need to worry here!
We are Zach & Cindi Honeycutt. We are a husband and wife real estate team working with buyers and sellers in the greater Raleigh Durham area. If you are looking to make a move, we would be honored to be your Raleigh Durham real estate agents!
Cindi & Zach Honeycutt, Movil Realty, 919-730-0777