What's Expected-Real Estate Summer, 2023 & Interest Rate Perspective!

We all know the real estate business really picks up in the Spring and moves it’s fastest in the Summer months.  So just before the schools get out, more homes go on the market, and more people are searching for future homes, let’s take a look at how the market is doing!

  We’re still in the same situation of low inventory of listings.  The market is a little slower than last year, but for buyers you must be aware that 61% of homes sold last month were at or over full asking price.  Many sellers homes are showing very well and are move in ready which is leading to their receiving the premiums they are asking for.  Buyers be prepared in these situations to give your best offer.  When looking back at 2022 and 2021, there is a delayed trend being seen.  Market experts are expecting the over asking prices to really peak sales in the the next few months!

  We also want to share some perspective on what has happened with the interest rate increase over the past year.  We pride ourselves in maintaining close relationships with mortgage lenders in our area who regularly inform and teach us about what is current in their industry.  While they are the experts of their field and we always direct questions to them, we can share what we learned this Spring that was great, historical perspective to share.  The average expected rates this Summer is around 6.4* (*indicates approximate).  This shouldn’t stop you from making a move because you can’t hold out for another year not being sure what will happen in regards to inflation.  Here is some historical perspective as to why.

  So let’s look historically dating back to the 1970’s.  The Federal Home Loan Mortgage Corporation known as Freddie Mac started tracking average rates beginning in 1971.  

  The interest rates in the 70’s started out around 7-8% but mid 70’s were up to 9.19%.  By the end of that decade, they were 11.2%.

  Here’s some interesting historical perspective moving on to the 80’s.  The fixed rate exceeded 18% with a rate of 18.45% at a historical peak in October of 1981.  The country was in the middle of a recession, largely caused by the oil crisis of 1973 and 1979.  The secondary oil shock caused inflation which inflation drives increased mortgage rates 100% of the time.   

  In the 90’s inflation calmed and the average rate was 7.44 with the lowest rate recorded at 6.94%.  In the 2000’s the average was between 7 and 8%.  We experienced the dot com bubble where aol folded and the 9/11 national security concerns and in 2004, the government then attempted to lower interest rates and created Option Arm where the fixed rate escalates after a certain period in efforts to increase home ownership.  Unfortunately this was the fog of smoke in mirror loan period.  This all essentially led to in 2007 there was a 40% drop in home values and in 2008 homeowners couldn’t afford their homes as the monthly payments increased at an unaffordable cost to income, the stock market crashed, and boom the housing market crash.  The US reputation around the world was tarnished.  It was a big hit.    So in 2008, the bailouts began for emergency economic stabilization and in 2010 the CFPB, the government’s governing of mortgage companies established rewritten guidelines that loan officers could no longer get paid any differently based on the type of loan they sold.  

  In 2010 through 2019 we had a recovery nationwide.  The average rate ranged pretty low from 3.66% to 4.17%. Then Covid19 happened in 2020.  From 2020 to 2022 the rates were the lowest in history.  This government response to the pandemic had the average rate those two years at 3%.   Moving out of the pandemic and the effects it had, we had a slight recession which has now led to the inflation, hence rise of the rates once again.  

  In a nutshell, will we ever see the historical low of 2-3%?  We can’t predict that.  You can see where we are going though, with the last couple years lows being that rare it isn’t advised to wait to make a move hoping for them to return.  When you look back as far as the 70’s going through the decades, these rates are actually quite normal and they are not an outlier in the highest range possible.  

  We hope this encouraged you to get away from the doom and gloom mentality and get back out there with excitement and joyful expectation of selling your home and finding a home of your dreams!!!  

Please contact us, we would love to work with you!!!

The Mulvihill Group

Turning Dreams Into Memories

 Reference: Victor Bals Team - USA Mortgage!