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Mortgage Rates Drop Causing Housing Prices to Rise From Increased Seller and Buyer Activity

The average fixed-rate 30-year mortgage continues to fall as it dropped by 0.06 percentage points, landing at 6.6% for the week ending January 18th, as reported by Freddie Mac. The current rates, marking a low not seen since May 2023, are stirring up expectations among prospective buyers and sellers, setting the stage for an active housing market. Increased activity is already evident despite the ongoing challenges of limited inventory and housing affordability, which makes it apparent that seller and buyer activity will be in full swing this Spring and Summer.

But how will this impact the current market that’s plagued with a housing shortage? Sam Khater, Chief Economist at Freddie Mac, provides some insight on this as he discusses the drop in mortgage rates, “This is an encouraging development for the housing market and in particular first-time homebuyers who are sensitive to changes in housing affordability. However, as purchase demand continues to thaw, it will put more pressure on already depleted inventory for sale.”

Lowered Rates Boost Housing Activity Leading to Increased Competition for Properties

As more people seek to capitalize on these low rates, the competition for properties will escalate. This, in turn, will drive prices even higher, impacting the overall affordability of real estate investments. Because of this, there’s a pressing urgency for investors to secure properties before additional price hikes take effect.

Report Highlights an Additional Decline in Housing Inventory

The U.S. Census Bureau released its latest report revealing a drop in newly built single-family housing. It states that new construction housing starts fell as single‐family housing starts in December were at a rate of 1,027,000; this is 8.6 percent below the revised November figure of 1,124,000.

“Despite the month-over-month decline in December starts, construction activity remains close to pre-pandemic levels,” says LPL Financial Chief Economist Jeffrey Roach. Adding to this, “The low supply of existing homes on the market is nudging potential buyers to new construction.” With existing homes in low supply and new construction starts falling below their numbers, this will further fuel the demand for both housing types, and elevate prices in the process.

Morris Invest Continues to Develop New Construction Properties for Prospective Investors

“I’m predicting a crazy spring for the real estate market, prices going up across the board, interest rates continuing to come down – it’s going to be a great year for real estate investors,” says Clayton Morris, Founder and President of Morris Invest. This is one driving factor behind Morris Invest’s increased production of new construction properties; they understand how the current market can present lucrative opportunities for investors.

How is this a lucrative opportunity? In buying a rental property before the market explodes, investors can lock in a lower price, which will allow them to gain significant equity when housing prices surge – see article on gaining equity in 2024 that dives into the subject.

So, while new construction starts have declined, fueling the current housing shortage, Morris Invest is moving forward full steam, creating build-to-rent properties in a housing landscape that can be used to an investor’s advantage. In addition to capturing equity, investors will also have the opportunity to charge higher rents, which will increase their cash flow, as mentioned in this recent post – Factors Behind the Ability to Charge Higher Rental Rates.

Power Resources for Investors

Use a Full-Service Real Estate Company to Lock in a Lower Price

With mortgage rates predicted to drop further and prices rising, those who have been on the fence about investing should take the plunge. If you wait, it will only cost you, decreasing your net profit. We’re currently working with many investors who realize how important it is to get ahead of the game while they still can, and we encourage you to schedule a free call to see what Morris Invest can do for you also.

Our team takes care of every detail when we work with an investor to purchase a rental property. In addition to this, we create a personalized investing plan for each of our clients. And for those who feel that money may be an issue, know that we work with 200 banks, which opens up opportunities for those who thought they wouldn’t be able to move forward. We can also go over how to use your retirement accounts, such as your 401(K), to fuel your investment journey.

Consider investing in a profitable rental property that promises consistent monthly cash flow that will allow you to build significant wealth. If your interest has been sparked, give our team a call – we would love to help you start investing in real estate.

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