This Real Estate Market Is the Strongest of Our Lifetime

This Real Estate Market Is the Strongest of Our Lifetime

When you look at the numbers today, the one thing that stands out is the strength of this housing market. We can see this is one of the most foundationally strong housing markets of our lifetime – if not the strongest housing market of our lifetime. Here are two fundamentals that prove this point. 

1. The Current Mortgage Rate on Existing Mortgages

First, let’s look at the current rate on existing mortgages. According to the Federal Housing Finance Agency (FHFA), as of the fourth quarter of last year, over 80% of existing mortgages have a rate below 5%. That’s significant. And, to take that one step further, over 50% of mortgages have a rate below 4% (see graph below):

Now, there’s a lot of talk in the media about a potential foreclosure crisis or a rise of homeowners defaulting on their loans, but consider this. Homeowners with such good mortgage rates are going to work as hard as they can to keep that mortgage and stay in their homes. That’s because they can't go out and buy another house, or even rent an apartment, and pay what they do today. Their current mortgage payment is more affordable. Even if they downsize, with today’s higher mortgage rates, it could cost more.

Here's why this gives the housing market such a solid foundation today. Having so many homeowners with such low mortgage rates helps us avoid a crisis with a flood of foreclosures coming to market like there was back in 2008.

2. The Amount of Homeowner Equity

Second, Americans are sitting on tremendous equity right now. According to the Census and ATTOM, roughly two-thirds (around 68%) of homeowners have either paid off their mortgage or have at least 50% equity (see chart below):

In the industry, the term for this is equity rich. This is significant because if you think back to 2008, some people had to make the difficult decision to walk away from their homes because they owed more on the home than it was worth.

But this time, things are different because homeowners have built up so much equity over the past few years alone. And, when homeowners have that much equity, it helps us avoid another wave of distressed properties coming onto the market like we saw during the crash. It also creates an extremely strong foundation for today’s housing market.

Bottom Line

We are in one of the most foundationally strong housing markets of our lifetime because homeowners are going to fight to keep their current mortgage rate and they have a tremendous amount of equity. This is yet another reason things are fundamentally different than in 2008.

 


Recent Blog Posts

Stay up to date on the latest real estate trends.

Worried About Home Maintenance Costs? Consider This

A buyer’s home warranty benefits both buyers and sellers, as it helps the seller close the deal while providing the future homeowner with peace of mind that they’ll be… Read more

House Flipping: The Quick Guide

House flipping is a dynamic journey through real estate, blending creativity, strategy, and profit. Nowadays, you can find many players in this market—from seasoned re… Read more

What Is Going on with Mortgage Rates?

The Fed decided to start raising the Federal Funds Rate to try to slow down the economy (and inflation) in early 2022. That rate impacts how much it costs banks to bor… Read more

The Best Way To Keep Track of Mortgage Rate Trends

Rates have been volatile and you may be wondering why? The answer is complicated because rates are affected by so many factors, including what’s happening in the broad… Read more

San Francisco Market Update - April 2024

In San Francisco, home prices haven’t been largely affected by rising mortgage rates after the initial period of price correction from May 2022 to July 2022. Since Jul… Read more

East Bay Market Update - April 2024

In the East Bay, low inventory and high demand have more than offset the downward price pressure from higher mortgage rates, and prices generally haven’t experienced l… Read more

Prepping Your Home For A Successful Sale

When you're ready to sell your home, doing a little preparation beforehand can potentially help your home sell quicker and for a higher price. 

San Francisco Market Update - March 2024

The median single-family home and condo prices rose meaningfully from December 2023 to February 2024, up 14.1% and 17.9%, respectively. Year-over-year prices also appr… Read more

East Bay Market Update - March 2024

Mortgage rates increased in February, but their strong effect on the market may be waning.

Let’s Talk

You’ve got questions and we can’t wait to answer them.