2019 Trend Report from Dustin DiMisa
The year might be winding down, but housing and mortgage trends are still of great interest to homeowners, potential buyers and lenders alike.
As CEO of InterContinental Capital Group, I have been committed to changing customers' preconceived notions about the loan process. Much of this is accomplished by streamlining procedures using the latest technologies and educating customers about their options before, during and after applying for a loan.
Keeping homeowners and buyers informed of current trends and the market outlook allows them to make better decisions about their finances and future. My trend report highlights some of the most important mortgage news and what trends you should be on the lookout for as the year ends.
A year in review
The biggest news this year concerned mortgage rates. Against the predictions of Fannie Mae, Freddie Mac and the National Association of Realtors, rates fell throughout much of 2019. NerdWallet also summarized this phenomenon; rates peaked at 5.09% in November 2018 but fell to 4.09% by June 2019 in contradiction to expert projections.
While this was a surprise to the market, it was ultimately beneficial for homeowners and buyers looking to refinance existing mortgages or make a purchase. This trend of rates around or below 4% will most likely continue into 2020.
Other factors that continued to seriously impact the market this year were the changing demographics nationwide. In 2018, the National Association of Realtors (NAR) reported first-time homebuyers made up 33% of residential home sales. While this number is up slightly from the previous year, it doesn't compare to the 50% they held in 2009.
It's no secret that younger generations are living at home longer and delaying home purchases due to increasing costs and mounting debt. Even though mortgage rates were low, potential first-time buyers were still either unmotivated or unable to make a purchase.
2019 has been a mix of surprises and continuing socioeconomic movement, it will be interesting to review reports at the end of the year for a better snapshot of these trends in comparison to the past.
In the remaining weeks of 2019 there may not be any major changes in the mortgage landscape, but here are some of the top continuing trends to be aware of going into the new year.
Rising home prices negate the benefits of low mortgage rates
We briefly touched upon the fact that even though mortgage rates are low, first-time buyers are still hesitant to make moves in the market. This is largely because home prices are increasing at a rate that cancels out some of the financial benefits a low mortgage rate could provide.
In August 2019, the NAR reported the median existing-home price for all housing types was $278,200. That's a 4.7% increase from the same time last year and marked the 90th straight month of year-over-year gains. Of course, this number is the national average and home costs vary greatly depending on location. While the rate of home price increases may soon begin to slow, expect to see a larger push for affordable housing options for first-time buyers.
Refinancing is becoming an increasingly attractive option for homeowners
Lower rates are a great incentive for homeowners to refinance their mortgage. The MBA's Weekly Mortgage Applications Survey published Nov. 20 found the Refinance Index decreased 8% from the previous week, but is still 156% higher than the same week one year ago.
Homeowners who are interested in cutting their monthly payments could benefit from refinancing into a mortgage with a lower interest rate. The experts at ICG can help evaluate your circumstances and help determine if refinancing would be beneficial for you, reach out today if you're interested in learning more.
A seller's market doesn't necessarily mean your home will sell quickly
Finally, it's important to note that just because we're currently in a seller's market, it doesn't mean your house will sell quickly at an above-average price. There may be more potential buyers than there are available homes, but younger generations are still hesitant to buy. If you want a quick turnaround on your home sale, you'll need to price it competitively and invest in some cosmetic and functional upgrades.
I and my team of experts at ICG are here to help you with all your loan information and needs. Contact us today.