Mortgage rates have fallen to 6.1% from over 7%
in the spring, pushing housing payments down by thousands of
dollars in the Bay Area and hundreds of dollars in most other major
metros
(NASDAQ: RDFN) —The typical San Jose, CA homebuyer’s monthly
housing payment has fallen more than $2,000 from its springtime
peak, landing at $9,398 in mid-September. That’s according to a new
report from Redfin (redfin.com), the technology-powered real estate
brokerage. San Jose saw the biggest drop in monthly housing
payments among the U.S. metros Redfin analyzed.
Housing payments are falling due mostly to lower mortgage rates:
In anticipation of the Fed’s historic interest-rate cut, which
happened last week, the average 30-year mortgage rate fell to 6.1%
in mid-September from roughly 7.2% at the end of April. Home prices
falling from their peak also play a part in declining housing
payments; San Jose’s median sale price dropped about 7% over that
period (some of that decline is due to typical seasonality).
Two other Bay Area metro areas saw the next-biggest drops in
median housing payments. In San Francisco, the median payment has
dropped $1,372 from its April peak to $9,330, and in Oakland it has
dropped $1,338 to $5,676. Southern California metros round out the
top five places where payments have dropped most, with an $840
decline in Anaheim and a $670 decline in Los Angeles.
This is according to a Redfin analysis of median monthly housing
payments, which are calculated using average 30-year fixed mortgage
rates and median sale prices, and assume a 20% down payment. The
analysis calculates median housing payments in major U.S. metro
areas for the four weeks ending September 15 (the most recent data
available), and compares them to the four weeks ending April 28,
when the U.S. median monthly housing payment hit an all-time
high.
The Bay Area also leads the pack in percentage declines. In
Oakland, housing payments have fallen 19.1% from the springtime
peak, and in San Jose they have fallen 18.2%. Three southern metro
areas round out the five places where payments have posted the
biggest percent declines: Austin, TX (-14% to $2,757),
Jacksonville, FL (-14% to $2,263) and Nashville, TN (-13.1% to
$2,829).
Housing costs fell in 44 of the 47 metros included in Redfin’s
analysis. They rose slightly in Newark, NJ ($39), Nassau County,
NY($26) and Cleveland ($25) due to increases in local home prices
outweighing mortgage-rate declines.
Mortgage rates dropped in anticipation of Fed’s interest-rate
cut
This is good news for homebuyers, who have been waiting years
for a meaningful drop in housing payments. The cost of buying a
home began rising in early 2022 as the Fed increased interest rates
to battle inflation, which pushed up mortgage rates. That dampened
demand, but it dampened supply even more, driving up home prices
despite slow sales. Median monthly mortgage payments peaked in
April, when home prices were approaching their all-time high and
mortgage rates were sitting above 7%.
Now, housing payments have fallen substantially from their peak
because mortgage rates are declining. Rates started falling over
the summer in anticipation of the Fed cutting interest rates for
the first time in four years; the Fed finally did cut rates
aggressively last week. Home prices have also fallen from their
peak—more significantly in some metros than others—but they have
generally stayed high due to low inventory.
Redfin economists to house hunters: Mortgage rates are
unlikely to drop much further, and prices may increase
Mortgage rates are unlikely to drop much further than they
already have, as markets had already priced in the Fed’s rate cut
prior to last week, and the upcoming Fed rate cuts may push
mortgage rates down to around 5.7%—but not much lower. Plus, home
prices may increase as lower rates bring back demand.
“House hunters who have been waiting on the sidelines for costs
to fall should seriously consider jumping into the market now,”
said Chen Zhao, Redfin’s economic research lead. “We’re in a sweet
spot for buyers. This may be close to the bottom for housing
payments, especially in expensive and desirable coastal markets.
Mortgage rates have fallen about as much as they’re going to fall,
and we’re already seeing demand surge back. If supply doesn’t
increase as much as demand, price growth is likely to rise.”
To view the full report, including a full methodology and a
metro-level summary, please visit:
https://www.redfin.com/news/falling-monthly-housing-payments-bay-area
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
rentals, lending, title insurance, and renovations services. We run
the country's #1 real estate brokerage site. Our customers can save
thousands in fees while working with a top agent. Our home-buying
customers see homes first with on-demand tours, and our lending and
title services help them close quickly. Customers selling a home
can have our renovations crew fix it up to sell for top dollar. Our
rentals business empowers millions nationwide to find apartments
and houses for rent. Since launching in 2006, we've saved customers
more than $1.6 billion in commissions. We serve more than 100
markets across the U.S. and Canada and employ over 4,000
people.
Redfin’s subsidiaries and affiliated brands include: Bay Equity
Home Loans®, Rent.™, Apartment Guide®, Title Forward® and
WalkScore®.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240925731333/en/
Redfin Journalist Services: Kenneth Applewhaite
press@redfin.com
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