Based on current interest rates, it’s a great time to buy a home, and it’s also a great time to sell a home. At this moment in time, sellers have the upper hand, prices are high, inventory is low and buyers are chomping at the bit to buy while interest rates are historically low.
The mortgage interest rates are so low that as of this writing they’re actually the lowest ever recorded by Freddie Mac since 1971, coming in at 3.23% for a 30-year fixed-rate loan. On Bankrate.com, I found an average rate of 3.01%. Remember that rates fluctuate daily and also depend on a buyer’s creditworthiness as well as the amount of down payment and points applied.
The drop in interest rates started in March and continued in April after the country was shut down because of the coronavirus. In March, the rate was about 4.2%, a full point higher than is typical now. Now the conversation from the financial talking heads is that the rates may stay low forever or at least for the foreseeable future until the country totally recovers from the financial impact of the virus. Needless to say, lenders are overwhelmed with applications, giving them the leverage to pick and choose.
Refinancing has also been strong, with homeowners attempting to lower their monthly rate during difficult times and/or pull cash out to help with expenses or attack those long overdue home improvements.
The problem is the banks are reserving their best rates for homebuyers – not homeowners who want to refinance. To make that situation even worse, Freddie Mac levied a new fee on lenders for most refinancing to protect them from potential losses; remember the 2008 housing bubble. Refinance rates even make a difference if the borrower just wants a straight refinance to lower their monthly payment or wants to pull cash out, which would typically have a higher rate.
Since mortgage interest rates have a direct effect on real estate sales, let’s take a look at the August sales numbers from the Realtor Association of Sarasota and Manatee website.
First of all, both Manatee and Sarasota counties broke another record for the median (half above and half below) sale price of single-family homes; Manatee at $360,000 and Sarasota at $330,000.
Manatee County single-family homes closed 9% more properties than August of last year. As stated, the median sale price was $360,000, which is up 13.6% from last year, and the average sale price was $480,903, 17.7% up from last year. Median time to contract was 30 days; last August it was 42 days. The month’s supply of available properties was 2.1 months; last year it was 3.3 months.
Condo sales were up 54.2%, the median sale price was $223,000, up 8.8% from last year. The average sale price was $261,548, up 4.1% from last year. Time to contract was 46 days; last year it was 50 days. The month’s supply of available properties was 3.3 months; last year it was 3.6 months.
Great numbers for property owners and sellers, but I’m still worried about the lack of inventory here and across the country. Record low interest rates and a change in lifestyle created by the coronavirus has accelerated the demand for properties. In the meantime, we can all enjoy the real estate wave. Stay safe.
