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Latest Updated Mortgage and Real Estate News 17 December 2024
The U.S. mortgage and real estate market is shifting significantly as of December 18, 2024, which affects sellers, buyers, and investors alike. Here’s a comprehensive overview:
Mortgage Rates and Predictions
Let’s look at the current averages step by step. These include the 30-year fixed mortgage, which sits at around 6.78%; the 15-year fixed rate, which sits at 5.94%; and the 5/6 adjustable-rate mortgages (ARMs), which average 7.35%. While all this was happening, the Federal Reserve steadily implemented cuts by scaling the benchmark rate to around 4.3%. However, because of the economic woes and low inflation, mortgage rates remained high, above 6%, as many analysts calculated.
Housing Market Activity
7.35% fixed mortgage rates, along with inflation and remodeling costs, severely restricted builders and home buyers alike from pursuing new projects. Most builders’ optimistic stance, hoping for a turn in market conditions, along with the continued price rise even as remodeling costs rose from $350,000 to $370,000 between 2020 and 2021, further restricted activity in the industry.
NewHome Construction
As housing construction felt the initial effects of the CR2 storm in 2021, the sudden rise in temperatures in the fall of 2022, coupled with the lack of consistent supply, felt like a final unlocking of the keyhole to this issue, with building starts in November having risen by 6.4% to an annual rate of an estimated 1 million units.
Although prices have risen, the rate of increase has been moderated compared to previous years.
Home Price Forecast for 2024-2029
Due to increased listings enabling a relatively higher home sales rate, home prices are predicted to remain flat. However, home prices will gradually rise between 2025 and 2029, with an estimated 1% increase yearly.
Housing Market Forecast for 2024
Substantial growth is anticipated in metropolitan housing markets, such as Oxnard, CA, Rochester, NY, and San Diego, CA. Prices and sales will ideally grow due to good economic conditions and stable prices.
Consumer Insights and Issues in the MarketMillennials as Homebuyers
One of the biggest blocks preventing millennials from fully engaging in the market is high home prices and higher mortgage rates. Based on current trends, 30-year-olds have a 43% homeownership rate, compared to 52% for baby boomers of the same age. Perceptions of homeownership or wealth due to economic imbalance within the generation heavily impact the decision-making process.
Concerns About Affordability: Today, as before, affordability continues to be an issue due to increased home prices and high mortgage interest rates. This led to elevated monthly repayments on existing mortgages. The increasing inventory levels would assist many prospective buyers, but the financial problem would remain.
Investment Opportunities
Real Estate Investment Trusts (REIT): Analysts say total returns on U.S. REITs should fall between 5 and 15 percent in 2025.
American Healthcare REIT, Extra Space Storage, and Cousins Properties are the best choices. These have made sensible investments and displayed steady occupancy rates. Still, their performance could be influenced by high valuations and anticipated changes in tax policies.
The American mortgage and real markets are adjusting to a trying period defined by high rates, low appreciation of home prices, and shifting consumer habits and behaviors. Operators must keep abreast of economic indicators to operate effectively in this economy, including the Federal Reserve’s decisions, policies, and market trends.
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