Have you noticed how there is always something that puts real estate trends in flux? There are always factors that impact this market. Since these trends always come and go, it can be difficult for you to have a basic idea of what to look for if you're planning on buying a house. This is why it can be beneficial for you to understand the fundamental factors that impact this market. You should keep on reading to find out more.
Increasing Real Estate Prices
Different factors can influence the prices of houses. For example, the available number of homes and the general local buyer demand are factors that can affect the rate of houses within that period. In addition, mortgage rates also impact the demand for homes that buyers are willing to purchase. So, when mortgage rates are lower, more people are interested in real estate. However, the price of real estate has been increasing significantly. According to research, in 2020, there was an 11% increase. This means that the current average price is just below $350 000.
Lowered Interest Rate
Due to several factors, interest rates on your mortgage have hovered around the lower end of the spectrum since 2020. For example, if you have a 30-year mortgage term, your current interest should be around 2.74%. This is up when you compare it to the previous year's 3.62%.
The fact of the matter is that your mortgage interest rates play a huge role in the real estate market. As a result, this affects the pricing of homes and their demand. In addition, it can filter down to the affordability of these homes. The Federal Reserve Policy can even influence the interest rate that's in the market. This means that there is an array of factors that impact the current interest rate.
You would be surprised to find that the current trend of increasing home prices doesn't mean that homes are becoming less affordable. The thing is that when you start because interest rates are at an all-time low, you should know that more home buyers can afford the current real estate prices.
Studies suggest that consumer house-buying power increased by 21% at the end of 2020. So, when you think of housing affordability in the current real estate conditions, you have to look at a slew of factors outside the prices. Factors such as interest rates, inflation, and what home buyers are earning have a considerable impact.
Decreased Buying Activity
There have been talks of mortgage prices going up in 2021. This has caused home buyers to slow down their pace when it comes to buying new homes. While it seems easier to buy a new home under the current market, there has been a 2% decline of existing home sales. Yet, this varies according to states. A report conducted by the Federal Housing Finance Agency, it shows that homes are still selling even at premium prices.
In summary, there are various factors that are always changing the real estate market. What is considered the most important conditions to look at right now, can change drastically tomorrow. It's always crucial for you to look at other things like inflation, interest rates, and buying trends if you want to see what conditions you should focus your attention on.