Mortgage Rates Post Temporary Drop:  Offering slight relief to home buyers this week, the 30-year fixed-rate mortgage fell to a 2.98% average. But rates may rise again soon.  Housing analysts largely expect mortgage rates to increase in the following months due to the Federal Reserve’s announcement this week that it will slowly reduce its monthly bond purchases. Sam Khater, Freddie Mac’s chief economist stated, “The housing market remains favorable for consumers, as rates remain below pre-pandemic levels and continue to support sustainable purchase and refinance opportunities.”  NAR  forecasts the 30-year fixed-rate mortgage to average 3.5% by the second quarter of 2022.

Home Sale Profit Margins Hit 10-Year High:  Home sellers continue to get richer as prices rise. Profit margins on median-priced single-family home and condo sales climbed to 47.6%, which marks the highest level in a decade.  The typical home sale nationwide during the third quarter generated a record-high profit of $100,178 as national median home prices continued to rise, ATTOM Data Solutions, a real estate data firm, reports. That is up from $88,800 in the second quarter of this year. Profit margins reflect the change between the median purchase and resale price.

Millennials to Keep Housing Strong for Years to Come:  Expanding wealth and growing families are prompting more millennials to become homeowners. Ultra-low mortgage rates are continuing to attract them as well. Young adults ranging from 26 to 41 years old comprise about 22% of the U.S. population. It’s why the housing market has been watching this age segment so closely for so long. More millennials have become homeowners since the pandemic. Millennials have accounted for the largest share of home buyers over the past year—37%, reports Barron’s. Millennials are approaching their peak earning years. “Over the next couple of decades, a quarter of the U.S. population is going to reach peak earning years, fueling continued housing demand—especially for inexpensive starter homes. 

Baby Boomers Face Challenges to Downsize:  Older home buyers shopping for a smaller home that they will find easier to maintain are struggling to find enough selection in today’s housing market. It’s making downsizing increasingly difficult.  Housing inventories for homes that are up to 1,400 square feet have fallen to a 50-year low, according to Freddie Mac, even as a growing number of young couples and aging seniors are competing for them. Price growth has been highest for smaller, less expensive homes.  Some baby boomers are choosing to age in place and retrofit their current home so they can stay there longer.

Renters Missed Out on $51K in Equity This Year:  Rents have been surging. Since January of this year, the national median rent has climbed by 16.4%.  Meanwhile, renters may be missing out on gaining equity. The average homeowner gained about $51,500 in equity over the past year, according to CoreLogic.  The higher rent prices are attracting investors, who have been flooding into the market seeing a rising opportunity, particularly single-family rental homes.

Buyers Also Face Competition From Investors:  Real estate investors are buying up homes, and first-time buyers increasingly are finding themselves up against them in bidding wars.  The share of investors is at the highest level since 2015, according to realtor.com®’s data. They’re most notably targeting the Midwest and Sun Belt, where rental prices are climbing but home prices still remain relatively affordable compared with some other regions of the U.S., realtor.com® says.