Northeast Ohio
Real Estate
August 19. 2022
Happy Friday!
Thank you for checking out my update. I hope you enjoy the upcoming weekend!

-Pat
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Factors Affecting Mortgage Rates

When the Fed raises interest rates, mortgage rates are likely to follow – right? Well, not exactly. In the wake of the Fed increasing its benchmark rate by 75 basis points, the average 30-year fixed mortgage rate fell.

Over the course of three days in late July, mortgage rates dropped from 5.54% to 5.22% and then again to 5.13%. Why did this happen? The determination of mortgage rates is based on several factors.

In addition to Fed rate changes, rates are also affected by jobless claims and unemployment, inflation, and supply and demand. In fact, mortgage rates are more closely tied to treasury yields and mortgage-backed securities than to the federal funds rate. The ongoing uncertainty about the economy has caused a decrease in new loan and refinance applications. To combat this lack of demand, lenders slightly reduced rates.

The bottom line, rates are still historically competitive. It's still an excellent time to buy (and sell) a home. Please reach out if you have some questions about rates or want to connect with one of my preferred lenders.
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Market Update
Construction starts of both single-family and multifamily housing units fell in July. The decline in single-family starts to 916,000 annualized units is the lowest since the COVID-19 lockdown months in the spring of 2020 and essentially matches the annual total of 888,000 in 2019 before the pandemic. The decline in multifamily starts to 530,000 (from 580,000 in the prior month) could be just the normal month-to-month volatility in apartment buildings. What is important is that multifamily construction is on pace this year to reach the highest activity in more than 30 years. Rapidly rising rents are economic incentives for building rental housing.

Homebuilders are naturally very cautious about rising unsold inventory during the construction phase. But those completed homes are finding buyers within three months, which is relatively swift for the new homes market. Improving conditions within the supply chain for the delivery of items such as lumber and appliances will lessen overall uncertainty. Moreover, demographics still suggest a sizable housing shortage. If mortgage rates remain near 5%, after reaching 6% in early June, there could be renewed buyer activity and additional inventory declines. Half of existing homes can still command the full listing price.

My take is that it's a unique time in the market. The shift has begun, but it's still a seller's market. Whereas I seeing 10+ offers on listings a few months ago, we are still seeing 1-4 offers on average. Still a great time to sell if you are on the fence.
Listing of the Week
12550 Lake Ave Apt 1101, Lakewood, OH 44107


Check out my newest listing here----> LINK

Enjoy private Lake Erie views from the beautifully remodeled condominium on Lakewood's desirable Gold Coast. No detail has been overlooked in this open floor plan in the coveted Meridian Complex. Comfort, design, and quality abound in this two bedroom, two bath unit. Brand new high end everything (appliances, quartz countertops, bathrooms, bar seating area, and much more). This will go quickly!
Pat Barmann
216.990.5719