Stay up-to date with the latest news in Real Estate Development.
As it was, the housing market was ugly, painful, and unsettling. The 8% mortgage rate has now returned
The housing market faces a crisis with skyrocketing mortgage rates, inflated prices, limited supply, and resilient demand. High demand during COVID-19 pushed prices up, and now a 30-year fixed mortgage rate has reached 8%, its peak in decades. This has led to the lowest mortgage demand in 30 years. Homebuilders haven't recovered from the 2008 recession, leading to scarce supply. Homeowners are reluctant to sell, fearing higher rates. Sales of pre-owned homes are the slowest since 2010, despite high home equity and low foreclosures. The National Association of Realtors expects a 20% drop in 2023 sales, even as prices stay flat. Certain markets may see growth, and builders like Lennar and D.R. Horton are offering incentives. Although single-family home construction is up, it's insufficient. Apartment rents are stabilizing, but buying remains challenging, with potential bidding wars when rates eventually drop.
Donate from your estate today to lower your future tax liability
Wealthy families currently benefit from a substantial federal estate-tax exemption, but this will change in 26 months. Unless Congress acts, the exemption will halve, impacting many who pay no inheritance tax now. Current limits are $12.92 million for individuals and $25.84 million for couples. Benefactors should act fast, as estate planning is time-consuming. Gifting cash or valuables annually within the $17,000 individual or $34,000 couple limit can reduce estate size. Exceeding these limits counts towards the lifetime exemption, potentially defeating the purpose. Other strategies include funding 529 college plans, creating spousal lifetime access trusts (SLATs), setting up qualified personal residence trusts (QPRTs), and transferring life insurance policies out of the estate. With property values rising, updated appraisals are crucial. Consulting professionals for estate planning is advisable to ensure more wealth reaches heirs despite the exemption reduction.
The 10-year Treasury note hits the crucial 5% mark once more: What that means to you is as follows
The 10-year Treasury yield hit 5% again, influencing mortgage rates and other loans. This follows Fed Chair Powell's comments on persistent inflation, hinting at potential rate hikes. Stock futures dropped as yields surged. Rising yields affect loans; new borrowers will pay higher interest. Factors like the Fed's policy, inflation expectations, and U.S. government debt are driving yields up. Mortgage and student loan rates are climbing, with direct federal student loans now at 5.50%. Auto loan rates are also at a 16-year high. However, savers benefit as high-yield savings accounts now offer over 5%.
Demand for adjustable-rate mortgages reaches its highest point in almost a year as interest rates rise
Mortgage demand has slowed to its lowest since 1995 amid rising interest rates. Total applications fell 1% last week, but adjustable-rate mortgages (ARMs) reached a 9.5% share of demand, a near-year high. The average 30-year fixed mortgage rate rose to 7.90%, while 5/1 ARMs increased to 6.99%. Refinancing applications grew slightly but are down 8% annually. Purchase applications dropped 2% weekly and 22% yearly, as buyers face high rates and low housing supply. The market for existing homes is notably sluggish.
