House hunters set their sights higher
Mortgage rates have fallen to unbelievably low levels, with 30-year fixed-rate home loans averaging less than 3% in multiple surveys. Three-quarters of homebuyers say the eye-popping rates are having an impact on their house shopping, according to a Realtor.com survey released Wednesday.
The savings most often are allowing buyers to look for bigger homes in nicer neighborhoods, the survey says.
At today's interest rates, the mortgage payment for a typical home is $125 a month lower than it would have been at last year's rates, says Danielle Hale, Realtor.com's chief economist.
But when you're looking for a mortgage, it's vital to comparison shop because different lenders can offer vastly different rates. Collect loan offers from multiple lenders and size them up side by side, to find the very best rate available to you.
Ultra-low interest rates aren't the sole reason many current house hunters are aiming higher. Nearly two-thirds say COVID-19 stay-at-home orders have helped them save more money.
About 4 in 10 (38%) of this summer's homebuyers say they've raised their price range since they first started searching. But they're looking for the same essentials that buyers wanted early in the year, before the coronavirus crisis hit: namely, three bedrooms, two bathrooms and a garage.
Other popular features include a renovated kitchen and large backyard space.
Home prices go higher, too
In many parts of the country, homebuyers willing to pay more aren't actually getting much more, because home prices have been rising sharply — largely because of the low mortgage rates.
Not only are rock-bottom rates luring buyers into the housing market, but they're also encouraging homeowners to refinance their mortgages, save heaps of money, and stay put in their houses.
As a result, home listings in June were down 27% from a year ago, Realtor.com says. So, under the old law of supply and demand you learned in back school, prices are climbing.
In May single-family homes nationwide cost 4.8% than a year earlier, says a new report from real estate data firm CoreLogic, and the price hikes have been even steeper in some markets. Prices soared 7.7% year over year in Philadelphia, for example.
But a price slump may be right around the corner.
"By the end of summer, buying will slacken, and we expect home prices will show declines in metro areas that have been especially hard hit by the recession," says Frank Nothaft, chief economist at CoreLogic.
Come May of 2021, the firm expects home prices will be down 6.6% from May of this year.
Experts say if you want to buy a house, don't wait for a price drop; you could easily shop around today and find the perfect, affordable home and a stunning mortgage rate.
Comparison shop for your homeowners insurance, too: Go online and gather several home insurance quotes to find the right coverage at the right price.