Lisa Mailhot | June 9, 2023
Buyers
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.
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.
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.
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.
Stay up to date on the latest real estate trends.
Sellers
Lisa Mailhot | November 30, 2023
Experience Unique Living: Converted Churches, Barns, and Factories Turned Homes. Discover the charm of unconventional conversions with history, character, and modern c… Read more
Buyers
Lisa Mailhot | November 28, 2023
Delve into the secrets of Orange County, California, with our blog featuring captivating trivia facts. Whether you're a potential buyer, seller, or a curious tourist, … Read more
Buyers
Lisa Mailhot | November 27, 2023
Uncover 2023 Orange County Housing Market Trends: Delve into median sold prices, sales metrics, and market dynamics to understand if it's a buyer's or seller's market.… Read more
Buyers
Lisa Mailhot | November 22, 2023
Stuck in a last-minute gift scramble? Discover seven low-stress, last-minute gift ideas that'll delight your loved ones and elevate their home experience. From cozy th… Read more
Sellers
Lisa Mailhot | November 21, 2023
Explore the changing real estate landscape influenced by declining mortgage rejection rates. Discover the opportune moment for buying or selling your home while improv… Read more
Sellers
Lisa Mailhot | November 20, 2023
 Selling your home with challenging neighbors? Learn how to handle noisy, disrespectful, or problematic neighbors effectively. Follow these tips to ease the selling pr… Read more
Buyers
Lisa Mailhot | November 16, 2023
Get the latest insights into the Orange County real estate market. Discover trends, notable closings, and the impact of the holiday season on inventory. Stay informed … Read more
Buyers
Lisa Mailhot | November 15, 2023
Stay informed on FHFA's 2024 multifamily loan purchase caps, totaling $140 billion for Fannie Mae and Freddie Mac. Explore the impact on the multifamily market and its… Read more
Sellers
Lisa Mailhot | November 14, 2023
Learn about the rise of alternative lenders, such as parents, as a solution to the affordability challenge in today's real estate market. Explore available options for… Read more
You’ve got questions and we can’t wait to answer them.