President’s Message – May/June
May is Advocacy Month, and during three weeks in May, NAR is offering 80 programs, services, and grants to show the importance of advocacy at the national, state, and local levels. There will be opportunities to support candidates, hold voter registration drives and community outreach events, and educate members about the good work that RPAC is doing. There are many ways for us to get involved in advocating causes that we believe in, and NAR can give support for many of them.
June is National Home Ownership Month, and Americans remain eager to own their own homes, as we REALTORS® are all so aware of during this extended seller’s market. This goal of homeownership, while never a problem for the well-heeled, is increasingly difficult to attain for many first-time buyers, as low inventories support the high plateau of list prices that are often exceeded significantly. Steadily rising mortgage interest rates at the same time are raising monthly payment amounts for new buyers.
The current 10-year Treasury rate of 2.8% has historically been accompanied by a mortgage rate on average of about 4.5%. If the Fed raises the Fed funds rate to 3.25%, as is expected this year, we can anticipate mortgage rates going to 5.7% or 6%.
The median house price in March of 2021 was $325,000 and the 30-year fixed-rate mortgage was at 3/1%. With a 20% down payment, the monthly principal and interest payment was 1,110 per month.
This March, the equivalent house median price is $375,000 (15% higher) and the interest rate is about 5% (62% higher). The monthly payment is $1,610 (45% higher).
Black Knight’s mortgage-payment-to-income ratio is now up to 31%: the highest reading since September 2007. During the 2010s decade, that figure averaged 19.9%.
REALTORS® who are working with less affluent buyers appreciate how important the services of good lenders and mortgage brokers can be, and the more up-front financial advice that we can share with buyers, the more confident they will be during the application process. It is important to spend time with buyers to set realistic expectations and map a path toward meeting the ownership goal, without overpaying for a home that may later lead to buyers’ remorse.
