Where to find affordable homes as prices rise
Here’s a look at the latest developments in the mortgage market this week.
- As home prices hit record gains, which markets are still affordable?
- Rates are expected to rise, but homeowners may still have time to save
- Existing home sales are picking up as new listings hit the market
- How to get a mortgage if you’re self-employed
As home prices hit record gains, which markets are still affordable?
Home prices have been on the rise for the last 11 months, and they just reached another record high gain. A new report shows prices in 20 major U.S. cities were up 14.9% in April, marking the highest annual jump in over 15 years. Phoenix, San Diego, and Seattle rose most among them.
Today’s high prices are the result of an ever-shortening supply of homes for sale. Inventory is at a historical low point, and builders are struggling to fill a gap of over 5 million homes around the country. Competition everywhere is steep, but it’s especially fierce in densely populated cities.
Casting a wider net outside of major metros can bring shoppers more selection. With the recent pandemic-driven shift to remote work, it’s easier for families to relocate into areas where owning a home is less expensive. Our guide to 10 of the most affordable cities offers up ideas for where to search. Your dollar can stretch further in these locales thanks to their lower-than-average cost of living and most come with a median price tag below $300,000.
If you’re not sure where your budget stands in today’s market, crunch the numbers quickly with the Better Mortgage home affordability calculator. It takes your assets, income and credit score to show you how big your budget could be.
Rates are expected to rise, but homeowners may still have time to save
A recent jump in mortgage rates was expected to kick off an upward trend for the year, but instead, the 30-year fixed rate average fell to 2.98% last week. In spite of the drop, refinance applications were down by 8% week-over-week.
Seesawing rates might make homeowners wary, but even recent highs could bring savings. The 30-year fixed rate was 4% or higher before the pandemic drove it down to 2.75%. That means the average homeowner who bought a home before 2020 could likely save by refinancing.
Despite last week’s drop, Freddie Mac analysts expect mortgage rates to rise gradually in the second half of 2021 as the economy recovers and inflation increases. The 30-year fixed rate should reach 3.4% on average.
If you’re on the fence about refinancing, see what the numbers say. If today’s rates would make a difference to your monthly budget, then it may be time to get the ball rolling on a new loan.
Existing home sales are picking up as new listings hit the market
A spring slump in home sales is easing up as the market gets a fresh batch of listings. Pending home sales, a measure of existing homes with signed contracts, rose 8% from April to May—a surprise to economists who expected them to drop by 1% in that period.
The momentum should continue as June saw 10.9% more listings for homes than the month before. Homeowners are getting more comfortable showing their homes as vaccination rates rise around the country, with many planning to sell this year.
Increased sales are a good sign that buyers can score a home in today’s low-inventory market, but competition is still tight. If you’re on the hunt, it’s important to make a strong, competitive offer and move quickly once it’s accepted. Read up on what to include, what to negotiate, and how to move smoothly from contract to closing.
How to get a mortgage if you’re self-employed
Mortgages were originally designed for salaried W2 employees, but today, there are contractors, freelancers, and self-employed business owners at every level of most industries. If you fall into one of those categories or don’t fit a traditional income mold, it doesn’t mean you can’t qualify for a mortgage and make steady payments. Read up on how to assess and organize your finances to raise your chances of getting a loan.
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