What we’re seeing in our market right now is that there’s not a lot of supply, and I believe extremely low interest rates are part of the reason why. A lot of the sellers who had planned to come on the market in 2020 have changed their minds, opting to refinance their mortgages instead. They’ve brought their monthly payments down and decided that they can stay in their current home a little bit longer.
Other sellers have decided to take cash out and put it toward a remodel of their current home instead of a down payment on a new one. Remodels and refinances don’t create more supply in a market that could benefit from it.
As of the recording of this video, interest rates are sitting around 3.55% for a 30-year fixed-rate mortgage. Compare that to November 2018, when 5.05% interest rates shocked many. When you factor in the payments based on today’s historically low rates, homes have actually become 20% to 25% less expensive.
Since the low rates mean homebuyers can afford a lot more house, it’s not surprising that the numbers show demand is up 19%. Inventory in the price range below $1 million, however, is down 34%. This combo results in higher home prices for most homes.
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