Now Could Be the Best Time to Buy a Home in Months as Affordability Improves

Now Could Be the Best Time to Buy a Home in Months as Affordability Improves

Seasonal home price cuts and a big improvement in mortgage rates over the last few weeks are contributing to a welcome improvement in homebuying conditions.


The surge in mortgage rates, limited inventory, and expensive home prices this year have resulted in a reservoir of pent-up demand from anxious and ready homebuyers. But with rates dropping over 0.5% in the last few weeks and more sellers lowering prices, that demand is slowly being released into the market. According to data from the Mortgage Bankers Association applications to purchase or refinance a home were up by 2.8% last week - the highest in five weeks.


The housing market is clearly showing signs of turning around. Let's dive into some of the big changes we've seen over the last few weeks and what they mean for your home purchase.


Inventory Increases Uncommon This Time of Year

Redfin recently reported that some “glimmers of hope” are emerging for prospective home buyers. The first one being that new listings increased 1.5% from a year ago during the four weeks ending November 5th. This was just the second increase since July 2022, which underlines the continued short supply in the housing market. Redfin noted that this increase is partly because new listings were falling during this period last year.


At the same time, active listings are at their highest level since the beginning of 2023, and months of supply ticked up 0.2 points to 3.6 months.



Inventory remains constrained nationally, with 4 to 5 months typically signifying healthy supply. But it is rising, which appears to be leading to price reductions. The share of listed homes with a price drop increased to 6.8%, a new record high.

More People Are Applying for Mortgages

Mortgage-purchase applications rose 3% from a week earlier during the week ending November 10, bringing them to their highest level in five weeks. That marks the second straight week of increases. And while pending home sales were down 8% year over year during the four weeks ending November 12%, that’s one of the smallest declines since April 2022.


House hunters are coming off the sidelines because mortgage rates are dropping from their peak: Average rates have declined from a two-decade high of 8% to the 7.4% range in the last month. 


Mortgage Rates are Improving with Inflation

Inflation has been one of the biggest stories of the past two years. Prices have been high, and the inflation rate peaked in June 2022 at 9.1% year-over-year, leaving many families with less purchasing power despite having the same income.


However, the Bureau of Labor Statistics announced last week that the inflation rate for October 2023 was 3.2%. Mortgage rates calmed in response to the data showing that the economy is finally cooling off. This includes October's jobs report, which showed that job growth slowed quite a bit last month.


The 10-year Treasury yield, which mortgage rates closely track, also fell following the CPI data release and is now at its lowest level in almost two months.


Cooler economic data is good news for mortgage rates, because it means the economy is normalizing. Over the past couple of years, sky-high inflation has helped push up mortgage rates, and as inflation decelerates, mortgage rates should come down further.


Lower Rates Will Bring Sellers off the Sidelines

New listings of homes for sale are up 3% from a year earlier, the biggest increase in two years and just the second increase since July 2022 (the first was last week). The total number of homes for sale is near its highest level since the start of the year.

There’s a variety of reasons why more homeowners are putting their homes on the market: Some are noticing the small uptick in homebuyer demand, some are worried home prices are going to decline if they wait any longer, and others are ready to give up their low mortgage rate after realizing rates are unlikely to drop back to pandemic-era levels anytime soon.


The Bottom Line

We are still optimistic that 2024 will continue to bring lower mortgage rates and provide some relief for homebuyers.

This won’t be an immediate drop to 5% mortgage rates. We will likely see some ups and downs in the months ahead, but the recent economic reports are clear indicators that the trend has reversed from higher and higher mortgage rates to lower rates ahead.


If you are not ready to make a move just yet, here are 3 steps you can take now to prepare for when the time is right:


1. Schedule a meeting with a mortgage advisor (even if you are not ready to buy!)

It’s always best to do this sooner rather than later. No credit check or application needed – we will just discuss your options and put a plan in place so you can move quickly when the time is right.


2. Choose a loan program.

Every mortgage program has unique benefits and different requirements to qualify. If you learn about these now and choose the one that makes sense for you, you will have a solid roadmap for what you need to do to prepare for your purchase.


3. Start improving your finances.

Once we’ve decided on the best mortgage strategy, the rest of the time will be spent here. Get your down payment in order, make sure you have all your income and asset documentation, pay off any debt you need to improve your credit score, and start planning for your new housing payment.


Preparation is key in this market! Starting the process early will make sure you are able to submit an offer on a home right away and lock in a lower rate when the time is right.


If you would like to know exactly what you need to do to prepare for a home purchase, fill out the form below to schedule a consultation with one of our mortgage advisors. They will answer all your questions and create a detailed loan comparison and action plan so you can be ready to submit an offer and move quickly when the time is right.

Overcoming Housing Market Fears

By Luminate Marketing Team • 06 May, 2024
The recent headlines broadcasting mortgage rates surpassing the 7% mark have instilled a sense of apprehension among potential homebuyers. In a market perceived as increasingly unaffordable, it's easy to feel discouraged. However, with the right mortgage strategy, you can transform this challenging market into an opportunity.  Historical Perspective on Mortgage Rates While current rates hovering around 7% seem daunting, a historical review reveals a broader context. During the early 1980s, mortgage rates soared to 18% and even in more stable times, rates have frequently fluctuated above 10%. This historical perspective is vital because it demonstrates that while today’s rates are higher than in recent years, they remain within a historical long-term normal rate range.

Why Cash Buyers Dominate the 2024 Real Estate Market

By Luminate Marketing Team • 28 Apr, 2024
The 2024 real estate market is ROUGH. Losing to multiple offers, emotional frustration, and the stress from competing offers is discouraging to say the least. Notably 32% of home sales are being clinched by all-cash buyers, the strategic advantage of wielding cash has never been clearer. This resurgence in all-cash transactions underscores a market where immediacy and certainty reign supreme, especially as home prices continue their upward trajectory against a backdrop of scarce inventory. Within this context, it’s prudent to evaluate every option that can help you sell an existing home and get your offer accepted on a new home. Navigating the Alternatives iBuyers : These entities provide a quick, straightforward selling process for homeowners looking to bypass the traditional market. By making instant cash offers, iBuyers appeal to those seeking immediacy and convenience. However, this often comes at a cost, including service fees and potentially lower offer prices, as the iBuyer model is designed for speed over maximizing seller profits. Power Buyers : Power buyer programs cater to homeowners wishing to purchase their next home before selling their current one. They typically employ financial tools like bridge loans to facilitate this process, offering a solution to the timing mismatch between buying and selling. While this approach adds flexibility, it can also introduce complexity and additional costs into the transaction. But it's important to remember that not all of the innovative iBuyer and Power Buyer programs are the same. It's all about finding the right fit for your situation. Luminate's Unique Approach At Luminate Home Loans, we've carved out our own niche in the market. We offer a program that turns our clients into cash buyers. This isn't just a minor perk; it's a game-changer. Being a cash buyer makes your offer far more appealing to sellers, cutting through the delays that often come with loan approvals. Our approach is designed with you, the homeowner, in mind. We give you the immediate advantage of a cash offer, coupled with the flexibility to choose the best financing option for you down the line. It's about giving you control and confidence in your home-buying journey. If you're navigating the complexities of buying and selling homes, our program might just be the solution you've been searching for. We focus on ensuring our processes are straightforward, your personal information is secure, and the transition to your new home is as smooth as possible. With Luminate, you're not just moving houses. You're stepping into a well-thought-out system designed to get you into your dream home with ease and certainty. If this sounds like what you need, we're here to make it happen.

Understanding Economic Shifts: How Rising Fast Food Prices Intersect with the Housing Market

By Luminate Marketing Team • 21 Apr, 2024
Have you been noticing the prices of fast food and other products going up? Well, you're not alone. Across the country, families are feeling the financial pain of previously low-priced items suddenly costing double (or triple!) what they’re used to. For example, a lunch for two in California at a fast food chain can easily be $40 nowadays, which is a big jump for places that tout “cheap fast food.” But why exactly is this happening, and what does it have to do with you buying a home? Keep reading for more insights. Why Are Prices Going Up? Starting in April of 2024, the minimum wage for fast-food and healthcare facility employees in California was increased. As a result, their wages went from $16/hour to $20/hour in order to provide better wages and living conditions for these workers. This rise in minimum wage, while much needed for the economy, is happening all across the nation. And when businesses have to pay their employees more, they often raise their prices to cover the costs. Which, unfortunately, means the burger and fries you love might cost more now. What Does This Have to Do with Housing? In recent news, you may have heard of President Biden’s housing plan to help first-time homebuyers and to reduce housing costs. This plan would give money to first-time homebuyers and some families looking to sell their homes. But just like with the fast-food industry, the effects can vary. In some places like California, where not enough houses are available, making homes more affordable might not be enough. In other places, it might help a bit more. So, What's the Best Move for Homebuyers? If you're thinking about buying a home in the near future, it's good to know about these changes and plans. By staying informed and working with an expert lender, you can take advantage of any changes as soon as they happen. But even though extra money in the economy sounds great, it's important to look at the whole picture, like how many houses are available and how much they cost. If more homes become available and the costs of borrowing money for a home go down, this could be a better outcome for buyers vs money that is thrown into the economy. Conclusion Understanding these changes can help you make better, informed choices about your financial future. Whether you're saving up for a big purchase or just deciding where to grab lunch, let us help you save money where it counts! Reach out to us today so we can help you navigate your home-buying journey without having to skip out on the fries.
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