Mortgage rates seem outrageously high until we look at mortgage rate historical averages. We will explore two concepts relating to mortgage rates today.

Nationwide resale home inventory is low because many homeowners feel trapped in their home as they do not want to relinquish their 3% interest rate. To them, selling and buying today seems like a financial penalty. Buyers nationwide have little to choose from, so not only are they paying higher rates, but they are also bidding for houses.

Normal Inventory in SW Florida

Of course, we do not have that issue in Southwest Florida as we have 6,694 single family homes on the market in Lee County right now. Buyers have an excellent choice to choose from.

One thing we know is when a home no longer suits your needs, you can only stay in it so long no matter the interest rate. Life changes. People sometimes relocate, there can be additions to families, subtractions when kids move out, or worse, death or divorce. The only thing constant is life never stands still, so consequently housing needs change.

People hold onto those low rates as long as they can, but then the pain of living in the wrong situation outweighs the savings of a low rate. Rates only seem high because for the last decade or so they have been abnormally low. Rtes are not high when you look at the mortgage rate historical averages.

Rates Below Normal Today

I just checked and rates today for a borrower with a high credit score and putting 20% down is 6.966% That’s less than the historical average of 7.74%

Mortgage Rate Historical Averages

We believe home sale transactions nationwide will begin picking up steam into next year, as long as the economy stays where it is. We believe this because life is changing, and people have been holding off for as long as they can, and as each year passes more people will begin the home transfer process.

Experts were expecting the Fed to cut rates 6-9 times this year.  We now know that is not true. Some are predicting 2 rate cuts this year starting in June. Time will tell if this is true. We believe rates will begin to fall, but June may be optimistic given the inflation numbers we look at.

Smart Buyers

Smart buyers in SW Florida are making the move now though. Currently we have excellent inventory for buyers, and sellers are more willing to make concessions today.  This may not be true when rates start falling again. Buyers have a window to lock in today’s prices and concessions, and another window to refinance later when rates come down. That is 2 windows open to buyers who can look through the window and see the future.

Later, one of those windows will close. Yes, buyers may be able to take advantage of lower rates in the future, but they might be staring at higher prices and less concessions from sellers. Just ask buyers from two years ago how fun it was to buy a house in SW Florida. We had multiple offers on almost every home, and sellers didn’t have to budge an inch to sell their home. In fact, many buyers waived inspections and paid way over asking price just to score a home.

Back to Normal

We discussed today’s interest rates from both the seller and buyer’s perspective. The reality is we are living in normal times, and normal feels abnormal because we just went through abnormal, and people rationalized it as the new normal. 2 years ago was never the new normal. Today is normal, and it’s not new. When you go back and look at history, we can see that the market is behaving exactly as it should. Get used to normal. I hesitate to say the new normal, because this is the old normal and it seems odd because we’ve gotten back to the real normal.

Take it from us, we know a thing or two about Normal. We’ve practiced real estate here for almost 40 years, but once upon a time we moved to SW Florida from Normal, IL. So, if you’ve got questions about Normal, we’ve got answers. 239-489-4042

Good luck, and Happy House Hunting!

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