Mortgage Rates Increasing Purchase Power
Historically low interest rates have allowed buyers to increase their purchasing power, despite rising prices. According to Freddie Mac, the 30-year fixed-rate mortgage in the U.S. was at 3.11% on average in 2020 — the lowest ever based on data going back to 1971. Does anyone remember the historically high-interest rates in the 1980s?
Thinking about refinancing?
Since market conditions and mortgage programs change frequently, you need to make sure you're dealing with a top professional who is able to give you quick and accurate financial advice.
Home Prices Driven by Supply vs. Demand
A major factor pushing home prices up is insufficient supply compared to demand, especially for existing home sales. The average Days on Market (DOM) metric for existing homes was at 20 days in 2020, compared to 42 days in 2019. In October, DOM dropped to just 13 days — a record low based on data going back to 2004. This means buyers need to act quickly and write a competitive offer.
On the last day of December 2020, there were just 333 homes available for sale, for both existing and new construction combined — 79.6% lower than December 2019 and a record low based on data going back to 2004.
However, there is some speculation that the low-inventory crunch will ease somewhat as we move through 2021 for two reasons:
- As the health crisis eases, more homeowners will be comfortable putting their houses on the market.
- Some households impacted financially by the pandemic will be forced to sell.
Tightening supply has increased rents in the Treasure Valley.
The City of Trees has seen the highest jump in rent prices among U.S. cities during the pandemic, according to a new study. Rents in Boise jumped 12.4% from January 2020 to January 2021.