Lower Mortgage Rates Hike Affordability
The big story in real estate this year — besides tightening inventory and rising prices in several market segments — is the effect (still) dropping mortgage rates are having on Buyers’ purchasing over.
So, when 30-year rates were over 4% — what, six months ago? — a Buyer who could shoulder a $1,200 monthly payment could afford a $275,000 house (assuming that they were putting 10% down).
Today, with 30-year rates on conventional mortgages well under 3.5%, that same $1,200 monthly payment lets a Buyer afford a $300,000 house.
No wonder that Sellers of such homes — especially ones in nice locations and in great condition — are doing so well this year.
P.S.: Of course, Buyers who still want to buy a $275,000 house can simply elect to pocket the savings (just under $200 per month).