The Strength Of The Current Real Estate Market

If you have seen the real estate market mentioned in the news recently, there is a good chance that it was in a negative context. Media networks like to focus on sensational headlines like “The Highest Interest Rate In A Decade” or “Foreclosure Crisis Imminent, but this is hardly an accurate depiction of the market. There are two key factors that prove why this isn’t the case.

The Current Mortgage Rate On Existing Mortgages

If you look at the average US mortgage rate for current homeowners, over 80% of them are below 5%. This is significantly lower than the historical average. On top of that, over 50% of homeowners have a rate below 4% as reflected in the graph below:

The reason that this indicates that the market is strong is that when rates are lower monthly mortgage payments will generally be lower. Because of this, homeowners are more likely to be able to make their payment and avoid foreclosure, allowing them to stay in their homes. 

The Amount Of Homeowner Equity

The average American is sitting on a large amount of equity in their home right now. Roughly ?’s of homeowners have either paid off their mortgage and own their home debt free or have at least 50% equity. You can see this illustrated in the chart below:

Real estate professionals call this situation “equity rich”. This is a strong position to be in because for many people the equity in their home is their largest asset and biggest investment. One of the reasons that the world experienced a real estate crisis in 2008 is that so many homeowners had very little equity in their homes due to either the low or no down payment requirements of the time or because of the prevalence of HELOCs and second mortgages that allowed them to pull money out of their homes, depleting their equity. We are currently in the opposite situation with today’s market, further signaling it’s strength. 

If you have any questions about the current real estate environment, our team of experienced real estate professionals would love to chat! We can further explain the real estate landscape and help provide guidance for your real estate journey. 

To learn more about the strength of today’s market, take a look at this article from Keeping Current Matters.