Higher Demand for Home Buying as Conditions Get Better

With the job market operating at a full capacity and mortgage rates being low, now is both a buyers and sellers market. . . as long as they choose to act quickly. 

 

In May 2017, the National Unemployment rate was 4.3 percent, according to the U.S. Bureau of Labor Statistics. For the U.S., this meets the definition of full employment across the nation. (When the unemployment rate falls below 4.7 percent, the labor market is determined to be at a full capacity.) Back in March 2017, the unemployment rate fell to 4.5 percent for the first time since late 2007. 

 

Additionally, the average interest rate on a 30-year, fixed-rate mortgage was around 4 percent in May, according to Freddie Mac. Previously, when the unemployment rate was at a 4.3 percent, (nearly forty years ago) the interest rate for the same type of loan was almost double. To put this into numbers, an average 30 year fixed rate mortgage for $250,000 with an interest rate of 8 percent would equate to $808,096.45 for the full term of the loan 40 years ago. For this same loan with only 4 percent interest, that would equate to $574,882.10 over the full term of the loan. That's a savings of $223,214.35!! 

 

Combining the strong job market with the affordability of home buying is creating an unquenchable demand for home buyers and home sellers to satisfy.

 

In the past, either the unemployment rate would be low or mortgages would be easily affordable. . . but never at the same time. 

 

Millennials are entering the prime age of buying homes while most conditions to purchase homes are in their favor. (With the exception being that the housing inventory is not meeting the full demand of the market.)

 

Housing inventory is low due to a two fold reasoning: a lack of new construction and a lack of sellers. Would-be sellers are reluctant to list their homes for fear of not being able to find a new home during the sale of their current home. New construction is happening, but not fast enough to meet the pace of the demand level. 

 

With the lowest unemployment rate in decades and the historically low interest rate, prepare to see the housing market continue with the trend of selling homes quickly. 

 

Have a great day!

 

Chris and Dawn