On May 24, Freddie Mac provided a monthly Outlook offering insight into positive housing market trends. The analysis explained why hampered economic growth hasn’t kept the real estate market from surpassing last year’s numbers.
Freddie Mac releases its Outlook report at the end of each month. Some of the main highlights from the May analysis include:
- Mortgage rates should be expected to increase a minimal amount between now and the end of 2017. Rates had dropped roughly .25 percent between March and May, sitting steady at around four percent.
- March saw the most existing homes sales in any month since 2007, just prior to the housing crisis. Brokers were also pleased to see a higher number of new home sales than had been projected. This year’s first quarter experienced the most total home sales since 2007, and the numerical data suggests that more than six million homes will be sold in 2017, a small increase from a year ago.
- The most recent analysis shows mortgage originations from the first quarter beating expectations by $60 billion. This is thanks in large part to a strong refinancing market, and experts are predicting that originations will top $200 billion in 2017.
- For the first time since the final quarter of 2008, nearly 50 percent of refinance borrowers withdrew cash in the first quarter of 2017, a five percent increase from late 2016. While the numbers are striking, it’s important to note that the share of refinancers taking out cash is still far from the 89 percent share seen in 2006.
Throughout the first half of 2017, there has been a fair amount of speculation as to whether or not the market was starting to recede. The affordability issues affecting certain parts of the country have been seen as an ominous warning by some, while decreased existing home sales have also raised red flags.
Because economic growth has been somewhat sluggish, trepidation amongst real estate investors has been on the rise. However, studies like this one indicate that the housing market is not yet succumbing to any sort of economic slowdown.
Sean Becketti, a chief economist at Freddie Mac, sees a very positive housing outlook. “Despite weak economic growth, housing got off to a good start in 2017 because low mortgage rates have given the spring homebuying season a pleasant surprise. Mortgage rates started March just above four percent and have mostly drifted lower since then, even falling below four percent. With home sales, housing starts and home values up, 2017 is shaping up to be the best year for housing in over a decade.”
Becketti’s point regarding mortgage rates is an important one for those who worried the homebuying season would be stunted. While certain regions have seen increased renting and decreased buying, the favorable rates have created an appealing market for the majority of spring shoppers. With strong first quarter numbers and solid indicators for quarters three and four, the optimistic projections for the year seem to be on track.
Even with housing sales approaching 2007 numbers, it appears there is still room for growth in the market. It also looks as though the housing market will continue churning in spite of any economic stagnation.
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