Optimism is in the eye of the beholder, and my eyes are seeing a hopeful turnaround in the housing market. The national and Florida housing markets have been in a slump, but just how long can buyers sit on their hands and watch their lives be stuck in neutral?
Nationally, June was a good month for people who locked in a mortgage to buy a home, and the mortgage volume rose to the highest level in more than three years. According to Optimal Blue, a mortgage technology and data company, the mortgage volume is up 14% from a year earlier and up 10% from May.
June was also a good month for Manatee County sales, according to the Realtor Association of Sarasota and Manatee. Single-family homes closed 26.2% more properties this June compared with last year, and condos closed 11.2% more properties this June compared with last year. In addition, inventory for both single-family homes and condos is down between one and two percentage points.
Because mortgages are typically locked in well before a closing, this is a leading indicator of home sales for the next few months. This is also true when you look at closed sales as a leading indicator of future sales because contracts of sale are generally signed a few months before closing.
That’s the good news; the bad news is even higher mortgage interest rates. In late July, mortgage rates rose to their highest level in almost a year. The 30-year fixed rate averaged 6.58% at that time, up from 6.55% the week before. This is still lower than the peak of nearly 8% in 2023.
Some economists are tying this to the Middle East conflict and the increase in oil prices and are predicting a further increase to 7% in the coming weeks. Nevertheless, economists are saying buyers are less sensitive to rate increases than in prior years. No longer does a half-percentage-point increase in rates scare buyers, as long as they still qualify for the mortgage. A significant decline in mortgage rates isn’t happening anytime soon, so buyers have finally realized it’s time to move on.
Higher rates, however, are more bad news for first-time homebuyers, who are now averaging 40 years old. Combined with the lack of inventory – because sellers are hanging on to their low-rate mortgages from the COVID-19 years – as well as rising insurance and maintenance costs, it makes for an almost impossible situation for first-time buyers.
Also, median existing-home prices in June rose to $440,600, a 1.8% increase from a year earlier and the highest level on record, according to the National Association of Realtors. Manatee County’s median single-family home price in June was $490,000, up 11.4% from last June.
No one is expecting a real estate boom, but any movement in the market is good. With buyers finally getting accustomed to higher rates, that movement may actually happen.
Optimistic? I actually am, because I’m a big believer in owning real estate as a pathway to wealth. Senior homeowners can’t stay in their homes forever; first-time and move-up buyers need to get on board with higher interest rates, and every buyer and seller in the country needs to look toward the future. That is why my eyes behold optimism.
