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Spring Season Mortgage Rates Dip Signaling Strategic Time for Real Estate Investors to Secure Properties

The real estate sector has experienced a modest but noteworthy change as the spring season mortgage rates experienced a drop, something the market hasn’t seen in over a month. Reports from Freddie Mac highlight this change, detailing that the average rate for a 30-year fixed rate mortgage lowered, moving from 7.22% down to 7.09% for the week ending May 9th.

This shift brings a much-needed break in a series of increases that have negatively impacted the housing market. It provides a chance for potential homebuyers, sellers, and real estate investors to leverage lower rates.

30-Year Fixed Mortgage Rate – Week Ending May 9th
Chart - Spring Mortgage Rates Drop Providing Opportunity for Real Estate Investors

Will Lower Spring Season Mortgage Rates Increase Housing Activity?

Springtime is when the housing market sees an uptick in buyer and seller activity, but this hasn’t been the case in a while due to climbing mortgage rates. Will the recent dip in rates be able to kickstart the housing market? Analysts are not positive at this point because although rates have come down, there’s still the issue of unaffordable housing prices.

Freddie Mac’s Chief Economist, Sam Khater touches on this, stating, “After a five-week climb, mortgage rates ticked down following a weaker-than-expected jobs report. An environment where rates continue to hover above seven percent impacts both sellers and buyers. Many potential sellers remain hesitant to list their home and part with lower mortgage rates from years prior, adversely impacting supply and keeping house prices elevated. These elevated house prices add to the overall affordability challenges that potential buyers face in this high-rate environment.”

Related Article: American Dream CRUSHED – SCE Housing Survey Reports Renters’ Hopes of Owning a Home Sinks to Historic Low

Regardless, individuals contemplating the purchase of a home or investment are advised to jump on the chance to lock in a lower rate.

Economic Factors are the Real Indicator of Mortgage Rate Shifts

If housing activity does pick up, it could be cut short if a rise in rates hits the market again. The chances of another surge are probable because mortgage rates can rise and fall on a daily basis, and this is typically influenced by the economic climate. These shifts are a reflection of varying elements such as inflation expectations, employment growth, and the overall pace of economic development.

When the economy shows signs of strength, mortgage rates typically increase, and they decrease in response to economic softening. For instance, as mentioned, the current spring season mortgage rates were affected by the April jobs report, published by the Bureau of Labor Statistics on May 3rd. It indicated a slight increase in unemployment rates month-over-month, along with job growth in April falling short of expectations. Typically, a rise in unemployment corresponds with lower mortgage rates.

Related Article: Five Key Economic Indicators that Affect Real Estate Investments

Ultimately, the real test will be whether this decrease in rates can sufficiently stimulate the market or if housing activity will suffer under the weight of continued financial pressures and economic unpredictability.

Investing Now is Key Regardless of What Direction Rates are Anticipated to Go in

Whether or not the market picks up speed because the spring season mortgage rates have finally dropped, now is the time for real estate investors to jump into the market. Some will wait to see what direction rates go in, but this could easily lead to missed opportunities. Buying now offers a lower interest rate at a time when the market is unsure if it wants to speed up, slow down, or remain stagnate.

If it accelerates, then investors will be forced to deal with bidding wars that will lead to higher purchase prices. If it slows down, then it’s likely less housing will be available due to reduced availability and a reduction in new housing starts. Diving in right now will enable individuals to grab a rental property before the market moves one way or another. Additionally, for those who feel mortgage rates are still too high, don’t forget that you can always refinance once rates do begin to lower significantly.

Related Article: Financial Benefits of Investing in Real Estate Sooner Rather Than Later

Resources for Real Estate Investors

Those who would like to invest and are interested in learning more, you’ll want to check out the following resources we put together:

Work with a Full-Service Investment Company to Make a Purchase Happen

The team at Morris Invest can take care of every aspect of placing a cash flowing rental property into a client’s hands. We craft a tailor-made investment strategy for each individual to meet their unique needs. Understanding financial concerns, we collaborate with over 200 banks to broaden the avenues for those who might feel that investing in real estate is out of their reach. Additionally, we explore options for leveraging retirement funds, like 401(k)s to support your dream of owning a rental property.

Investing in build-to-rent residential properties can be a lucrative avenue to generate steady monthly income and accumulate wealth. If your interest has been sparked, don’t hesitate to contact Morris Invest to discuss your goals regarding rental real estate.

Before you go, dive into the following video to get informed on how the American Dream is falling apart:

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