Overview of the Current Real Estate Market
The state of the real estate market thrives with having a healthy pulse according to many statistics and indicators. It continues to be a perfect combination of healthy demand, attractive rates and an overall stable economy.
As we proceed through the last quarter of 2015, let’s take a look at the different factors that are displaying true signs of health.
Cash Sales – The amount of cash sales has fallen. According to the Boston Business Journalcash sales were down over 18% this past August in Massachusetts. Much like the Commonwealth, the nation’s cash sales to total sales ratio was also down 3.2 percentage points overall. As the economy has strengthened it has driven home prices up to pre-recession levels making cash sales more and more less frequent.
Number of Sales – Housing sales continue to increase in the Northeast. In fact, in the month of October the amount of sales spiked 135% according to The Boston Herald showing a result of a busy fall market. Nation-wide new home sales were up 10.7% which is also a good sign following suit. “Prices made solid gains, for sure,” said Kristin Reynolds, an economist with IHS Global Insight.
The increase in higher prices achieved for homes is also a positive sign for developers as it shows a good demand for new product. In addition, existing homeowners watch their homes appreciate which then fosters spending and economic growth.
Mortgage Rates – Overall this fall mortgage rates have held somewhat stable and are still at historic lows. A slight increase in the average 30 year fixed at the end of October went from 3.76% rising to 3.97% and then back down to 3.95% by late November.
The average on a 15 year mortgage has remained relatively unchanged holding at 3.18%.
There has been talk about raising the Federal Funds Rate at the end of the year. This is the rate banks charge each other overnight. This would be a first for nearly a decade. With a current near zero rate, a small increase may have effect on what borrowers can afford. However, keeping all things in perspective, rates today are still at all time lows. According to Jonathan Smoke, Chief Economist at Realtor.com, the average interest rate over the last 40 years is 8%. Even with a small increase, our rates today are drastically lower and fall below 4% for an average 30 year fixed. This shows us that the cost to borrow money is still relatively cheap.