11 Sep The Latest Mortgage Rates and Minnesota Real Estate Market News
Mortgage rates reached a 7 year high of 5% in 2018. However, we’ve been on a steady decline in 2019. As of this week, the 30-year-fixed-rate mortgage average is 3.93%. The 15-year adjustable-rate mortgage average is 3.64%. This type of mortgage always has a lower rate because it’s less secure and will fluctuate with the interest rate. What do changing rates mean for the Real Estate market? Lower rates mean it is more advantageous to sell and then buy a home. The big hope in the Minnesota market is an influx of people selling first to raise the inventory. We currently don’t have near enough homes to meet demand. A countrywide low supply and rising prices are putting pressure on the market.
A positive sign is mortgage applications rose 1.6% showing people have interest in buying a home. Surveys by Realtor.com list debts, such as student loans, credit card balances, and medical debt, as a big reason people aren’t buying right now. The source lists debts impacting 26% of Generation X, 36% of Millennials, and 35% of Generation Y demographic. A long standing problem in the market is a lack of affordable housing, which has been steadily growing. National Mortgage News states, “The shortage of affordable homes that followed the financial crisis a decade ago is something that has been exacerbated by higher mortgage rates over the past few years.” Freddie Mac says 46% percent of mortgage seekers are first-time homebuyers.
Minnesota Real Estate Market Conditions
Holden Lewis, the home expert at the financial advice website NerdWallet, said, “…if construction of affordable housing doesn’t keep pace with population growth, then rents and home prices will rise.” We are seeing this struggle with Minnesota’s growing population. Minnesota State Demographic Center Department of Administration stated, “Minnesota’s population grew 5.2% between 2010 and 2017, adding 273,562 residents (net).” Growing population leads to growing rent costs and home prices.
NerdWallet provides this chart showing the percent of income devoted to housing in Minnesota and a few other cities. It’s more affordable to own a home but with low inventory and high prices it’s challenging to move from renting to owning.
With mortgage rates at a new low and fall market right around the corner, now is a good time to sell or buy a home. This isn’t necessarily because the market conditions are spectacular. I say this because we have consistently low inventory paired with the growing population and housing costs meaning things may not get better any time soon.
Learn more about the market and how to sell or buy a home by reading these blog posts:
- 1. 6 Tips for Finding a House, Showing Etiquette and Buying a Home
- 2. 5 Ways to Update on a Budget
- 3. Remodeling Is More Important Than Ever When Selling A Home
If you have any questions, please let us know. We’re always happy to help!