When interest rates drop, housing becomes more affordable. Over the past several weeks, Freddie Mac has reported the average 30-year fixed mortgage rate dropping to record lows, all the way down to 3.03%. Last week’s reported rate reached the lowest point in the history of the survey, which dates back to 1971 (See graph below):
What does this mean for Alexandria VA buyers?
This is huge for homebuyers. Those currently taking advantage of the increasing affordability that comes with historically low interest rates are winning big. According to Sam Khater, Chief Economist at Freddie Mac:
“The summer is heating up as record low mortgage rates continue to spur homebuyer demand.”
In addition, move.com notes:
“Summer home buying season is off to a roaring start. As buyers flooded into the market, realtor.com® monthly traffic hit an all-time high of 86 million unique users in June 2020, breaking May's record of 85 million unique users. Realtor.com® daily traffic also hit its highest level ever of 7 million unique users on June 25, signaling that despite the global pandemic buyers are ready to make a purchase.”
Clearly, buyers are capitalizing on today’s low rates. As shown in the chart below, the average monthly mortgage payment decreases significantly when rates are as low as they are today.A lower monthly payment means savings that can add up significantly over the life of a home loan. It also means that qualified buyers may be able to purchase more home for their money. Maybe that’s a bigger home than what they’d be able to afford at a higher rate, an increasingly desirable option considering the amount of time families are now spending at home given today’s health crisis.
What's been happening with Alexandria VA home prices?
Take a look at the interactive chart below, use your mouse to hover over the different data points. Here, you can see the median home prices for the past five year, broken down by detached (single-family) homes, attached homes (townhouses, rowhouses, and duplexes), and condos.
But you can't look at the home prices without understanding the supply and demand for homes. If you look below and the month's supply of homes for sale in Alexandria VA since 2015, you'll see the downward trend, including the noticeable drop that takes place after November 2018, which was when the Amazon HQ2 announcement was made.
Since November 2018, we've been hovering around a month's supply of homes, which means the buyers are still competing for homes, and this dynamic continues to cause home prices to increase.
If you’re in a position to buy a home this year, let’s connect to initiate the process while mortgage rates are historically low.