Recently, there has been a slight increase in 30-year fixed mortgage rates and a slight dip in mortgage applications. In fact, rates rose to over 3% in early March, breaking an almost year-long decline during the pandemic that resulted in record lows. Although this has been a cause for concern for many, industry experts believe the market activity isn’t showing signs of stopping anytime soon.
In fact, Lawrence Yun, chief economist for the National Association of Realtors®, recently stated that this year’s spring home buying season should see a 40% – 50% increase in home sales over last year. If this estimate is accurate, it will most certainly result in further constraints on the already tight inventory of homes for sale.
The impact on home affordability and the refinancing market
Any rate increases will create affordability challenges for buyers. Fortunately, today’s rates are still at historical lows relative to the past few decades. Of course, rising prices combined with even slight upticks in rates may be enough to price some buyers out of the market. In particular, first-time home buyers will be impacted the most.
In addition, the sun may be setting on the recent boom in home refinancing as well. According to data from a recent Weekly Mortgage Applications Survey, released by the Mortgage Bankers Association (MBA), mortgage refinancing applications have dipped since the start of March. Although home-buying is generally sensitive to the changes in mortgage rates, refinancing is even more sensitive.
The overall outlook for the housing market remains quite strong across the country for the foreseeable future. In South Florida, this is most certainly the case. With more Americans looking to depart other states with a high tax burden combined with an overall high cost of living, many are looking to move to South Florida. In general, if you are looking to buy a home in the next several years, most industry experts believe it is better to do so today as opposed to tomorrow, next year, or after that.
Although this is a highly competitive real estate market, buyers can still find success with proper guidance. At Live South Florida Realty, Inc. we have a proven track record of success with our clients. Feel free to contact us today to learn more about the South Florida market and how we may better assist you.