As a result, mortgage rates for both 30-year and 15-year fixed loans have stayed around their highest levels in over two decades. This has pushed monthly payments for prospective homebuyers significantly higher, reducing affordability and cooling market demand in many areas. In particular, first-time buyers and those with tighter budgets are finding it increasingly difficult to enter the housing market.
The recent trend has been disappointing, especially after a year of anticipation that rates might begin to ease. Many industry analysts and market participants had hoped to see more encouraging trends by this point, yet inflation remains a concern, causing the Fed to proceed cautiously. These high rates have led to a continued slowdown in new mortgage applications, refinancing activity, and overall transaction volume.
With limited affordable options, inventory has also stagnated, as sellers with low-interest mortgages are reluctant to move and take on higher rates. Both the real estate industry and potential homeowners are eager for relief, but the wait appears set to continue as the Fed's priorities remain focused on stabilizing the economy.
The Modesto market reflects these national trends as SOLD inventory dropped 3.1% from September’s figures. The months of inventory total (the amount of time in months that it would take to sell all current inventory with out adding further units) remains at a stubborn 2.3, up slightly from last month’s 2.2 figure.
The different price segments remain stingy as well. Availability of homes between $300k and $500k dropped drastically in October from 159 to 133, while homes in the $500k - $800k range increased from 106 to 166 (see chart below). The 17 condos available under $300k is the second highest total for all of 2024.
Buying a house is a big decision, but with some basic steps, you can make the process easier. Here’s a simple guide to help you navigate buying a house:
Determine your budget: Before you start looking at houses, figure out how much you can afford. Consider your income, expenses, and any debts you have.
Get pre-approved for a mortgage: This will give you a better idea of what you can afford and make you a more attractive buyer to sellers.
Find a real estate agent: A good agent can help you find houses that meet your criteria, negotiate with sellers, and guide you through the buying process.
Start house hunting: Look for houses that fit your budget and meet your needs in terms of size, location, and amenities.
Make an offer: Once you find a house you like, work with your agent to make an offer. Consider factors like the condition of the house, the current real estate market, and the seller’s asking price.
Get a home inspection: Before closing the deal, hire a professional to inspect the house for any issues that could be expensive to fix.
Finalize the mortgage: Work with your lender to finalize your mortgage and ensure all necessary paperwork is in order.
Close the deal: Sign the final paperwork, pay any closing costs, and take possession of your new home.
Move in: Once you’ve closed the deal, it’s time to move in and start enjoying your new home!
Remember, buying a house can be a complex process, so don’t hesitate to ask questions and seek guidance from professionals along the way.