We may sound like a broken record reiterating the all-time low mortgage rates that have sprung upon us this year.
Seriously, according to bankrate.com the average rate right now for a 30-year fixed mortgage is 3.15 percent. Compare that to the 2019 average of 4% and you can see why first time homebuyers are swelling in ranks.
Add quarantined families wanting to buy larger dwellings and individuals relocating jobs into the mix, and you have yourself a serious supply and demand imbalance.
So, while low rates mean good news for current home buyers and high demand means even better news for sellers, what does this mean for future first-time homebuyers?
What the experts are reporting
Not only are current home buyers benefiting from low rates, so are current homeowners.
Many homeowners have rushed to refinance their current mortgage to take advantage of this mortgage rate phenomenon.
With these individuals securing their current homes at such a good rate, it likely means they plan on residing there just a bit longer. Especially if rates go back up in a couple of years.
This leaves future home buyers with a shortage of starter homes to choose from.
Following data trends, it is not expected for rates to stay this low forever.
If you look at historical rates from Value Penguin, you can see the on and off fluctuation over the past decade.
In 2011, the average rate was 4.45%. This rate then went down to 3.66% in 2012, and then jumped up to 4.17% in 2014.
This trend only continues. While an economic forecast by Fannie Mae projects that the 30-year fixed-rate mortgage will average 2.8% next year, there is no telling what the future holds for the year after that.
With much uncertainty in our current economic climate, it is important to keep a close eye on these forecasts if you are waiting to buy a home.
Do not panic
With the prediction of a possible housing shortage on the horizon, remember that it is only just that – a prediction.
Homebuilders and construction starts have already set out to pick up on the low supply of homes available to buyers. As a result, they are quickly ramping up their business to meet the demand.
According to Realtor.com, permitting activity for newly-built homes rose 2.1% between May and June to a seasonally adjusted annual rate of 1.24 million.
And, of course, there will always be homeowners that need to move – whether the reason being financial or not.