The mortgage rate has been very active lately.
The 30-year fixed mortgage rate currently stands at around 4.77%.
Just for reference, that’s near a seven-year high, and almost 1% higher than just a year ago. This is the result of a steady rise starting last September and ending this May.
What impact is this having on the real estate market?
It’s certainly true that affordability is down.
In fact, one estimate from June found that home affordability is at a 10-year low. This is translating into fewer home sales, fewer viewings, and fewer mortgage applications.
But here’s the thing:
I personally don’t believe that the shifts in the mortgage rate are the primary movers of the changes we’re seeing in the real estate market. In fact, even at its current level, the mortgage rate is still historically low.
Instead, the big reason for the changes in the real estate market is the ongoing growth in prices. Over the past several years, home prices have gone up at close to twice the rate of inflation, and have far outstripped the growth of incomes.
The price increases, in turn, have been caused by a lack of inventory, which has been shrinking for the past three years. In my opinion, it’s this lack of inventory (and the resulting hike in prices) that explains most of the effects on the real estate market that I listed above.
So what does this mean for you?
Well, if you’re looking to sell, you should still have no trouble doing so, in spite of the rise in the mortgage rate.
Again, that’s simply because there’s a shortage of inventory on the market right now. In other words, demand continues to outstrip supply, and even with dropping affordability, it’s very likely that you would find a buyer quickly and at a top price.
If you are considering selling, you might be interested in finding out what your home is worth in the current Central Texas and San Antonio market:
What if you’re looking to buy?
Well, the picture is more complex, because it’s so hard to predict what the mortgage rate might do in the near term.
One thing we do know is that the severe lack of inventory (the other part of the affordability equation) is unlikely to change any time soon.
The good news is that several beautiful homes have recently come on the Central Texas and San Antonio market. If you want to take a look at them, check out this complete listing:
And as always, if you have questions about the Central Texas and San Antonio real estate market, whether you’re buying or selling, you can give me a call at 210-908-7800. I’m here to help.