Inflation in the Housing Market.? How will Mortgage Rates & Home Values be impacted?
Watch the original video: June Mortgage Market Update
Here’s my Monthly Mortgage Market Update for June 2021. In this month’s video, I’ll answer important questions on housing bubbles, inflation, mortgage rates, housing equity, mortgage insurance cancellation, and paying over appraisal value. Watch the video above to learn more. (Below is a summary of each topic I discussed in the video)
🏘 Are we in a House Bubble?
Housing prices alone in Shasta County have gone up by 20% since the first quarter of 2020. This is due to a supply and demand problem. If we take a look at the market right now there are a ton of millennial buyers that have entered the market. Nationwide right now there are only 1 million homes for sale with almost 8 million more households searching for housing. However to answer the big question everyone is asking, Economists are NOT calling this a housing bubble.
🤯 Inflation
A Consumer Price Index report came out recently stating that CPI is 5% higher than a year ago. This number does not include food or energy. It has jumped up by almost a whole 2% since only a month ago. The only way the government can slow inflation is by raising the federal interest rate. This could increase rates even more. When the government raises rates it will decrease demand which will even out the supply and demand problem.
⚠️ Mortgage Rates
Right now surprisingly rates are LOW despite the CPI report. I would still highly encourage people to continue locking in your rates now. At this point rates may stay where they are at or go down by the end of the year. Again, I would strongly encourage you to be prudent and lock in your rate upon receiving an accepted offer.
🏡 Housing Equity
If you bought a house at the beginning of last year, you are now wealthier. What should you do with the equity in your home? The equity in your house is not wealth until you convert it by pulling equity out or selling it. There are people who are doing a cash out refinance where they are pulling some of that equity out to pay off debt. A couple questions you should ask yourself are first is this the best option and second is this putting you in a worse position? Lastly, what are you pulling the money out for? If it is not to pay off debt, buy rental properties, or to put back into your home then I’d advise against it. Give me a call, I would be happy to discuss all your options.
🚫 Mortgage Insurance Cancellation
How do I get rid of my mortgage insurance without refinancing? If you are happy with your mortgage rate and do not want to refinance, I would recommend you call the number on your statement. Then apply to remove the mortgage insurance. In the end this will help save you a lot of money without having to refinance.
💲 Paying Over Appraisal Value
Right now if you are in the housing market, you are seeing people offer as much as $40,000+ over the asking price. Appraisals are coming in lower and buyers are willing to pay the difference between the asking price and the appraised value. If you are a buyer right now, you may be wondering is this wise or not? There is no easy answer because it depends on your current situation. If you don’t have enough for a down payment and your housing payment would double or triple, I would not encourage you to buy. Instead you should save your money until you have enough for a down payment. However you should buy right now if you already have a down payment.
I’m always available for anyone who has questions involving housing or mortgage. Feel free to reach out. Call, text or email me anytime.