The homebuying season is almost here, and those looking to make a purchase will find that conditions are ripe. Mortgage rates remain affordable, homeowners are coming watching their equity increase and winter weather is disappearing. All these conditions have combined to kick off what is expected to be a springtime homebuying frenzy.
According to the latest Primary Mortgage Market Survey from Freddie Mac, mortgage rates have fallen as tepid economic gains and housing information likely kept them at affordable levels. The survey showed that a 30-year fixed-rate mortgage averaged 4.28 percent in the week ending March 6, down from 4.37 percent a week before and up from 3.52 percent on a year-over-year comparison. It also showed that a 15-year fixed-rate mortgage averaged 3.32 percent during the week, down from 3.39 percent a week before and up from 2.76 percent a year ago.
As mortgage rates had previously increased in the four weeks leading up to the prior survey, the recent decline is a welcome sign for homebuyers, especially considering how much mortgage rates fell.
"Mortgage rates were down this week as real GDP was revised downwards to 2.4 percent growth in the fourth quarter of 2013," said Frank Nothaft, vice president and chief economist at Freddie Mac. "Fixed residential investment negatively contributed to GDP decreasing 8.7 percent in the fourth quarter. The private sector added an estimated 139,000 jobs in February, which was below the market consensus and followed a downward revision of 48,000 jobs in January, according to the ADP Research Institute."
Homeowners finally poised to sell
As the housing downturn in 2008 left many Americans with underwater mortgages - meaning they owed more on their home than it was worth - the inventory of homes for sale was very low.
However, in the years following the collapse, the housing market has showed significant gains and more homeowners are now able to sell their properties. According to a recent report from CoreLogic, a residential property information, analytics and services provider, 4 million homes returned to positive equity in 2013.
"The plight of the underwater borrower has improved dramatically since negative equity peaked in December 2009 when more than 12 million mortgaged homeowners were underwater," said Mark Fleming, chief economist for CoreLogic. "Over the past four years, more than 5.5 million homeowners have regained equity, reducing their risk of foreclosure and unlocking pent-up supply in the housing market."
The improvements in equity were a result of the robust price growth last year. As double-digit annual home price gains were the norm in 2013, homeowners were able to sit back and watch their equity improve.
"Stability and growth in the housing market are essential for a durable recovery of the U.S. economy," said Anand Nallathambi, president and CEO of CoreLogic. "The rebound in home prices in 2013 helped 4 million property owners regain at least some positive equity in their largest asset - their home. We still have a long way to go to eliminate the negative equity overhang but significant progress is being made every day across most of the country."
The report noted that 6.5 million homes are still underwater, accounting for 13.3 percent of all residential properties with a mortgage.
The necessity of a home inspection when buying
As this spring and summer will see an increased number of homebuyers, those making a purchase are encouraged to look into the benefits of a home inspection.
Having an unbiased home inspector assess a property can give any buyer the confidence they need to make what will likely be the largest purchase of their life. From the foundation to the roof, a buyer will know the exact state of the property before buying.