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Relaxed Mortgage Rates Mean Serious Savings for Buyers (Market Report)

Buyers are getting some much-needed relief and more homeowners appear to be breaking free from “rate lock.” But competition for homes is still relatively stiff, despite improvements in inventory. 

Competition has cooled significantly from demand-fueled pandemic peaks, but it’s still a little hotter than pre-pandemic “norms”. Homes are moving about 50% faster, more sell for a premium, there are fewer choices and costs are higher.

Home buyers are finding significant savings as mortgage rates fell from 23-year highs in October. But as we’ve seen in recent weeks, mortgage rates are fickle things. They’ll play a massive role determining appreciation and affordability – especially for first-time buyers – going forward in 2024. Fortunately, rate lock appears to be wearing off for some homeowners, who show encouraging signs that they’re ready to come back to the market.

A recent Zillow survey of homeowners found 21% are considering selling their home within the next three years. That’s up from 15% a year ago. 

The survey, fielded in Q4 of 2023, also found that the share of homeowners considering selling was almost the same whether they had a mortgage rate above or below 5%.

That’s a big change from six months ago, when homeowners with rates above 5% were nearly twice as likely to consider selling. 

The survey data shows more owners with low rates are warming up to the idea of selling, while those with higher rates probably purchased their house fairly recently. Current mortgage rates look to be less of a determining factor when considering a sale.

Home values 

This month, the typical home in the US was $344,000. The typical monthly mortgage payment, assuming 20% down, was $1,790.

  • Home values climbed month-over-month in just three of the 50 largest metro areas in December – which typically vies with January for the weakest monthly appreciation in a calendar year. Gains were biggest in New York (0.2%), Las Vegas (0.1%), Miami (0.1%), Riverside (0%), Richmond (-0.2%).
  • Home values fell, on a monthly basis, in 46 major metro areas. The largest monthly drops were in Minneapolis (-1.1%), New Orleans (-1.1%), Milwaukee (-1.1%), Buffalo (-1.1%), San Antonio (-1%).
  • Home values are up from year-ago levels in 43 of the 50 largest metro areas. Annual price gains are highest in Hartford (11.7%), San Diego (8.4%), Milwaukee (7.9%), Providence (7.9%), Boston (7.5%).
  • Home values are down from year-ago levels in seven major metro areas. The largest drops were in New Orleans (-8.1%), Austin (-7.2%), San Antonio (-3.3%), Jacksonville (-0.5%), Dallas (-0.5%).
  • The typical mortgage payment is up 7.5% from last year and has increased by 106.5% since pre-pandemic.
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