Al's June '19 Market Watch
Interest Rates Continue To Fall
It seems like only yesterday that real estate pundits were calling for 5 percent interest rates and its negative effect on the housing market. With rising home prices plus increasing mortgage rates, affordability for home buyers, especially first time buyers, was coming into question. Well, times have changed.
Interest rates on a 30 year mortgage fell to 3.82 percent on June 7 (Freddie Mac average rate), continuing a trend that has seen rates drop from 4.54 percent last June and plunge by more than a full percentage point since last November.
This is great news for both home sellers and buyers. For sellers, lower interest rates makes their home more affordable to buyers and sustains the recent gains in home appreciation that they have enjoyed. It also eliminates the negative financial situation of giving up a low mortgage on an existing home for a higher rate in a move. For buyers, a drop in interest rates makes it easier and less expensive to finance their home purchase.
For example, a $300,000 30 year mortgage at the current rate of 3.82 percent would have a monthly payment of around $1,400, compared to $1,600 monthly payment for a similar mortgage at the 4.94 percent rate that was available in November. That’s a 12.5 percent difference, giving more buyers the ability to own their first home, or for present home owners to move upward into larger homes.
Somerset County Towns Bucking National Housing Trends
According to the National Association of Realtors (NAR) total housing inventory increased to 1.83 million units, up from 1.67 million existing homes available for sale in March, and a 1.7 percent increase from 1.8 million a year ago. Unsold inventory is at a 4.2 months supply, up from 3.8 months last month and from 4.0 last year. This suggests, according to experts, that the market is getting closer to a “normal” market (6 months supply of available homes) versus the seller’s market that we have seen over the last several years. And as a result sellers will have to be more realistic in pricing.
But Bridgewater, Branchburg and Hillsborough are not experiencing that same trend. In Bridgewater, housing inventory has increased over the past two months from 158 units to 191. But at the same time, the months supply of available homes decreased from 4.51 months to 3.47 months, suggesting increasing buyer activity.
Branchburg and Hillsborough experienced the same. Although Branchburg’s active inventory stayed the same at 67 units, its months supply decreased from 5.15 months to 2.68 months. Hillsborough’s active housing stock increased from 144 to 153 units as its unsold inventory dipped from 4.65 months supply to 3.83 months supply.