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There was a fair bit of negative real estate and mortgage news on the wires this week, so we wanted to also include a nice story about how a Big Apple architect connected to his eco-roots where he lives.
Here are Homefinity’s market insights for the third week of September in 2023.
Latest average U.S. Mortgage Rates 2023-09-14
- 30-year fixed: 7.18% (previous week: 7.12%)
- 15-year fixed: 6.51% (previous week: 6.52%)
- 30-year FHA index: 7.042% (previous week: 6.986%)
- 30-year fixed rate Jumbo index: 7.674% (previous week: 7.241%)
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Redfin reports monthly housing costs reach an all-time high
In a recent report by Redfin, the median U.S. monthly mortgage payment has soared to an unprecedented $2,632 during the four weeks ending on Sept. 10.
This alarming surge in housing costs can be attributed to a combination of factors, including mortgage rates exceeding 7% and a 4% year-over-year increase in home prices.
What this means for homebuyers
Purchasing a home has never been more costly.
Persistently high mortgage rates, though slightly lower than August’s peak, remain above 7%.
Additionally, home prices continue their upward trajectory due to a severe shortage of housing inventory.
As a result, some prospective buyers are choosing to postpone their home search, as reflected in a 12% year-over-year decline in pending home sales.
What about home sellers?
Right now, it seems sellers are the ones who can take advantage of the current market conditions.
With inventory levels plummeting, especially in sought-after neighborhoods, Redfin believes homeowners should expect fair prices for their properties, especially for homes that are move-in ready and located in desirable areas, traditionally attractive features for buyers.
However, as we showed above, the combination of high prices, elevated mortgage rates, and limited inventory is causing some potential buyers to stay on the sidelines. Mortgage-purchase applications are hovering near a three-decade low.
Looking ahead at mortgage rates
Redfin’s number-crunchers and crystal-ball gazers think that, while a recent CPI report indicates a slightly higher-than-expected inflation rate, the Federal Reserve is unlikely to raise interest rates in the upcoming week.
However, there is a growing possibility of rate hikes in November or December.
Whether mortgage rates remain high or decrease depends on upcoming economic data.
MBA: Commercial and multifamily debt soars by $37.7 billion
In a recent report by the Mortgage Bankers Association (MBA), the second quarter of 2023 witnessed a robust increase in commercial and multifamily mortgage debt outstanding—rising by a substantial $37.7 billion, marking an impressive 0.8 percent growth.
At the end of Q2 2023, the total outstanding debt in the commercial and multifamily mortgage sector reached a staggering $4.60 trillion.
Notably, multifamily mortgage debt, in particular, surged by $26.4 billion, a substantial 1.3 percent increase compared to the first quarter of the same year, bringing the total to $2.03 trillion.
Factors that contribute to the rise
MBA’s Jamie Woodwell attributes this remarkable growth to various factors, including increased holdings by life insurance companies, government-sponsored enterprises (GSEs), banks, and other depositories.
The surge in outstanding mortgage debt can be seen as a consequence of decreased mortgage originations in the commercial and multifamily sector, leading to fewer loans being paid off, which, in turn, maintains or even boosts the overall credit volume.
Who holds the debt?
A breakdown of the four largest investor groups reveals that commercial banks continue to dominate, holding 38 percent of the total commercial and multifamily mortgages at $1.8 trillion.
Agency and GSE portfolios and mortgage-backed securities follow as the second-largest holders, accounting for 21 percent at $971 billion.
Life insurance companies hold $692 billion (15 percent), while commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs), and other asset-backed securities (ABS) issues constitute 13 percent, totaling $593 billion.
NYTimes: Near-zero carbon home renovation
Finally, the NYTimes recently reported how, in the heart of Brooklyn, an architect looked to create a sustainable haven for his family and prove that constructing a nearly carbon-neutral dwelling was feasible.
Aaron Schiller’s vision centered on mass timber construction, a technique employing engineered wood for structural elements, a sustainable alternative to steel and concrete, notorious for greenhouse gas emissions.
He stripped an 1870s brick carriage house in Clinton Hill, Brooklyn, down to its core, added a third-story addition, and introduced innovative features such as a central skylight above an open staircase—even allowing a tree to flourish inside the home.
Sustainable materials and advanced insulation techniques were used to reduce energy consumption.
Despite COVID-related delays, the project that was started in 2017 finished in early 2023, showcasing that eco-conscious renovations can be both sustainable and aesthetically pleasing.
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Photo by Suzy Hazelwood