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As the numbers roll in, there is one striking observation that stands out – the robustness of the current housing market. Realtor Kevin Farfan, affiliated with Coldwell Banker Realty, believes that we are witnessing one of the most solid housing markets of our lifetime, perhaps even the strongest. His conviction is backed by two pivotal factors: the prevalence of low mortgage rates on existing homes and the substantial equity homeowners currently possess.
- Low Current Mortgage Rates on Existing Mortgages
Diving into the first key indicator, we find that according to the Federal Housing Finance Agency (FHFA), more than 80% of existing mortgages boast a rate below 5% as of the fourth quarter of the previous year. Even more remarkable is that over half of these mortgages have a rate below 4%.
With media chatter revolving around a potential foreclosure crisis or a surge in homeowners defaulting on their loans, these low mortgage rates serve as a beacon of stability. Homeowners with such favorable mortgage rates are highly likely to strive to maintain their mortgages and keep their homes. The reason is simple – they cannot find similar affordability elsewhere, not in purchasing a new home, nor in renting an apartment. The potential to pay more, even after downsizing, due to the prevailing higher mortgage rates, strengthens the resolve of homeowners to hold on to their current properties.
This trend provides a resilient foundation for today’s housing market, as the likelihood of a large-scale foreclosure crisis, similar to what we experienced in 2008, diminishes.
- Significant Homeowner Equity
The second factor reinforcing the strength of the current housing market is the impressive amount of equity that American homeowners have accrued. Data from the Census and ATTOM reveal that roughly two-thirds (about 68%) of homeowners either own their homes outright or have at least 50% equity.
This situation, known in the industry as being ‘equity rich,’ serves as a bulwark against the repeat of the 2008 scenario when many homeowners were forced to abandon their properties because they owed more than their homes were worth.
In contrast, the current landscape is drastically different. Homeowners have accumulated significant equity over the past few years, thereby reducing the likelihood of a surge in distressed properties entering the market, as was the case during the crash. The high equity levels also provide a firm foundation for the present housing market.
In Conclusion,
We are navigating through one of the most secure housing markets in our lifetime, where homeowners are highly motivated to maintain their current favorable mortgage rates and are buoyed by substantial equity. The real estate landscape of today bears a fundamental difference from that of 2008. If you’re interested in taking advantage of this favorable market or simply want more information, contact Kevin Farfan at Coldwell Banker Realty at 813-784-7139. His expertise in real estate can help guide your journey in this robust market.
