Home Buying Frenzy and Mortgage Demand Continues Heading Into October

Home Buying Frenzy and Mortgage Demand Continues Heading Into October

Home Buying Frenzy and Mortgage Demand Continues Heading Into October: The COVID-19 crisis has driven interest rates, up until now, to unimaginable levels as the Fed scrambles to stimulate the economy. Mortgage demand continues to climb as a buying frenzy extends beyond traditional seasonal patterns in real estate. Applications to purchase a home are now 25% higher than a year ago according to a report by the Mortgage Bankers Association.

Not Enough Houses for Sale to Meet Growing Need

Over the last few years, shortages in houses for sale have been problematic in the housing industry, but the situation has grown even worse in recent months. Buyers are actively searching for and purchasing homes, looking to capitalize on today’s historically low-interest rates, but there are just not enough houses for sale to meet the growing need. 

Since the start of the pandemic in March, there have been nearly 400,000 fewer homes listed than the same time period in 2019. That has created a huge deficit in the housing supply at a time when consumers are rushing to buy. Home prices are increasing at double the pace of last year, and homes are selling 12 days faster than in 2019, according to a Realtor.com® Weekly Housing Report.

Low Rates Have Ignited Robust Purchase Demand Activity

“Sellers are more reluctant to list their home, given the uncertainty over the economy and the pandemic environment,” says Javier Vivas, director of economic research for Realtor.com®. “Buyers, on the other hand—especially hungry first-timers—remain largely unfazed by the challenges and are motivated by low mortgage rates and the fear of missing out on the right home.”

“Mortgage rates have hit another record low due to a late-summer slowdown in the economic recovery…These low rates have ignited robust purchase demand activity…However, heading into the fall, it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity,” says Sam Khater, Chief Economist at Freddie Mac.

Despite higher home prices and tight supply, homebuyers continue to flood the market with the strongest sales on the high end of the market as consumers seek larger spaces for working from home. That is also where the supply available for sale is greatest. Yun says this pattern “will be in place long after the pandemic is over.” Existing-home prices for all housing types in August climbed 11.4% compared to a year ago, reaching a median of $310,600.

Housing Indicators from August 2020

A closer look at housing indicators from August, according to NAR’s latest report:

  • Days on the market: 69% of homes sold in August were on the market for less than a month. Properties stayed on the market an average of 22 days in August, which is down from 31 days a year prior.
  • Housing inventories: Total housing inventory at the end of August was 1.49 million, which is down 18.6% from a year ago (1.83 million). Unsold inventory is at a three-month supply at the current sales pace.
  • First-time buyers: First-time homebuyers accounted for 33% of home sales in August, which is up from 31% a year before.
  • Investors and second-home buyers: Investors or second-home buyers purchased 14% of homes in August, which is equal to a year ago. Investors and second-home buyers tend to make up the biggest bulk of all-cash sales, which accounted for 18% of transactions in August, down from 19% in August of last year.
  • Distressed sales: Foreclosures and short sales represented less than 1% of sales in August, which is down from 2% from last year.

Mortgage Rate Trends As Predicted by Housing Authorities

September held the lowest rates of all time and housing agencies nationwide are calling for rates in the low 3s through year-end.


30-Yr Rate Prediction

Wells Fargo


Fannie Mae


Freddie Mac


National Assoc. of Home Builders


Mortgage Bankers Assoc.


National Assoc. of Realtors


Average of all agencies


“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market,” says Yun. “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3%, and with continued job recovery.“

Partner with Top-rated Farmington Hills MI REALTOR® -Tom Gilliam

2020 Best of Farmington Hills REALTOR - Tom GilliamWhether you are interested in buying a home in Farmington Hills, MI, or its time to list your current property, experience matters most in a changing market.

With over 20 years of local experience, Farmington Hills REALTOR® – Tom Gilliam offers in-depth knowledge of the local market and has access to the most up-to-date listings. Known for his professionalism, Tom is an expert at uncovering the perfect home for his clients’ lifestyle needs in the right neighborhood or community.

Search Farmington Hill MI homes for sale

For sellers, Tom will create a comprehensive marketing plan that exposes your home to the public as well as to other real estate agents through the Multiple Listing Service (MLS), other cooperative marketing networks, open houses for agents, and so on.

Your listing will appear on all the most popular real estate sites where buyers spend hours a day looking at homes such as Realtor.com, Zillow, Trulia, REMAX, Redfin, and dozens of others. Your property will also be featured on Tom’s own highly-trafficked website Homes2moveyou.com. You can be assured that your home will get sold quickly and for the highest market price.  

Tom works very hard for his clients. He will protect your interests and be your guide and advisor throughout the home buying or selling process. If you or someone you know is interested in real estate in Farmington Hills MI, please give Tom Gilliam a call at (248) 790-5594 or you can reach him here.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

Article Sources: 


What Historically Low Mortgage Rates Mean for Farmington Hills MI Homeowners & Buyers

What Historically Low Mortgage Rates Mean for Farmington Hills MI Homeowners & Buyers

What Historically Low Mortgage Rates Mean for Farmington Hills MI Homeowners & Buyers

Mortgage rates fell below 3% for the first time ever in July, as the economy continues to struggle from the effects of the coronavirus pandemic. Many Americans have rushed to take advantage of this unprecedented opportunity, while others have questioned if these rates are truly a bargain?  

While average mortgage rates have hovered between 4% and 5% in recent years, they haven’t always been so low. In 1971, Freddie Mac began tracking 30-year mortgage rates, and at that time, the national average was 7.31%. As the rate of inflation started to rise in the mid-1970s, mortgage rates surged.

In 1981, the average mortgage rate reached a high of 18.63%. By October 1982, inflation normalized, which sent mortgage rates on a downward trajectory that would bring them as low as 3.31% in 2012. Since then, 30-year fixed rates have risen modestly, with the daily average climbing as high as 4.94% in 2018.

According to the National Association of Realtors’ Chief Economist – Lawrence Yun, “the number one driver of low mortgage rates is the accommodating Federal Reserve stance to keep interest rates low and to buy up mortgage-backed securities.” According to Yun, “we will see mortgage rates stay near this level for the next 18 months because of the significance of the Fed’s stance.” 

How Low Mortgage Rates Benefit Current Farmington Hills MI Homeowners 

Low mortgage rates increase buyer demand, which is good news for sellers. However, if you are not planning to sell your home in Farmington Hills MI anytime soon, you can still benefit from falling mortgage rates. Many homeowners are capitalizing on today’s historically low rates by refinancing their existing mortgages.  

Refinance applications have surged over the past few months. Reduced interest rates can save homeowners money on both monthly payments and total payments over the lifetime of a mortgage. The chart below shows the potential savings when you decrease your mortgage rate by just one percentage point. When it comes to refinancing, the bigger the spread, the greater the savings.

Estimated Monthly Payment On a 30-Year Fixed-Rate Mortgage 

Loan Amount 4.0% 3.0% Monthly Savings

Savings Over 30


$100,000 $477 $422 $55 $20,093
$200,000 $955 $843 $112 $40,184
$300,000 $1,432 $1,265 $167 $60,277
$400,000 $1,910 $1,686 $224 $80,368
$500,000 $2,387 $2,108 $279 $100,461

If you are looking to refinance, expect to pay between 2% to 5% of your loan amount. Divide your closing costs by your monthly savings to find out how long it will take to recoup your investment, or use one of the handy online refinance calculators. 

How Low Mortgage Rates Benefit Farmington Hills MI Homebuyers 

For homebuyers, low mortgage rates can save you money on your mortgage payment and also increase your purchasing power. For example, let’s say you have a budget of $1,500 to put toward your monthly mortgage payment. If you take out a 30-year mortgage at 5.0%, you can afford a loan of $279,000. If the mortgage rate falls to 4.0%, you can afford to borrow $314,000 while still keeping the same $1,500 monthly payment – a budget increase of $35,000.

If the rate falls even further to 3.0%, you can afford to borrow $355,000 and still pay the same $1,500 each month –  a budget increase of $76,000!  If you’ve been priced out of the market before, today’s rock bottom mortgage rates may put you in a better position to afford the home you’ve always dreamed of.  

How Low Could Mortgage Rates Go?

No one can say for sure how low mortgage rates will fall or when they will rise again. A lot depends on the trajectory of the COVID-19 pandemic and the resulting economic impact. Positive news about a vaccine or a faster-than-expected economic recovery could send rates back up to pre-pandemic levels. However, Freddie Mac and the Mortgage Bankers Association predict 30-year mortgage rates will average 3.2% and 3.5% respectively in 2021.  

While mortgage rate forecasts may differ slightly, many experts agree on one thing: Those who wait to take advantage of the lowest rates ever in history could miss out on the deal of a lifetime. 

Partner with Top-Rated Farmington Hills MI REALTOR® – Tom Gilliam

2020 Best of Farmington Hills REALTOR - Tom GilliamAre you currently in the market to buy a home in Farmington Hills, MI? Tom Gilliam is an award-winning Farmington Hills MI REALTOR® with over two decades of local experience. Tom keeps his finger on the pulse of the market at all times and is the first to know when new inventory becomes available, ensuring that his buyers have access to the most valuable homes and securing an offer.

Search Homes for Sale in Farmington Hills MI  

With extensive local market knowledge and access to the most up-to-date Farmington Hills MI listings, Tom can help you explore your options and make the best home purchase decision. Streamline your home search by having Tom put together a list of homes for sale in Farmington Hills that are the best fit for your lifestyle and needs.

Tom works extremely hard for his clients and provides the kind of personalized service you need a deserve when buying a home. If you or someone you know is interested in Farmington Hills MI real estate, please give Tom Gilliam a call today at (248) 790-5594

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

Sources: CNN Business, Bankrate, Mortgage Bankers Association Mortgage Market Forecast July 15, 2020, Fannie Mae July 2020 Housing Forecast, Freddie Mac June 2020 Quarterly Forecast

The Residential Real Estate Market is Bouncing Back – July 2020

The Residential Real Estate Market is Bouncing Back – July 2020

The Residential Real Estate Market is Bouncing Back – July 2020 – Even with the coronavirus pandemic, a recession, protests, and record unemployment, the residential real estate market is staging a rebound. So, what is the big reason for a bounce-back in real estate sales?  “The number of buyers in the market far outstrips the number of homes available,” says Realtor.com Economist George Ratiu.  After months on hold, Americans are beginning to feel more confident about the idea of buying or selling a home.

Buyer demand has been incredibly strong since mid-May after the coronavirus shut down most housing activity in April. The only thing standing in the way of more sales is the record-low supply of homes for sale. According to realtor.com data, median home prices went up 6.2% year over year in the week ending June 27, and homes are selling faster than they did in 2019 before anyone had ever heard of COVID-19. 

Redfin reported that more than half of its offers faced competition in June. Specifically, 54% of home offers placed by the real estate agency’s representatives faced bidding wars. Redfin Economist Taylor Marr commented on this almost surreal state that the housing industry now finds itself in:

“Bidding wars continue to be fueled by historically low mortgage rates and fewer homes up for sale than almost any time in the last two decades. It’s like a game of musical chairs where only the best bidders get a seat. Both renters and move-up buyers who have held onto their jobs are vying for the small number of single-family homes on the market as they realize they need more space for their families,” stated Marr.

Ali Wolf, the chief economist of Meyers Research (a national real estate consulting firm) stated that “The housing recovery has been nothing short of remarkable. The expectation was that housing would be crushed. It was—for about two months—and then it came roaring back.”  Nearly two-thirds of consumers (61%) said it was a good time to buy a home in June, based on a Fannie Mae housing survey of 1,000 participants – a 9 percentage point increase from May. Roughly 41% of respondents said it was a good time to sell, also an increase of 9 percentage points from the previous month.  

“The second month of improvement in June allowed the HPSI (Fannie Mae Home Purchase Sentiment Index®) to regain some of the sharp losses in optimism observed in March and April,” said Doug Duncan, Senior Vice, and Chief Economist. “The share of renters who say it’s a good time to buy a home is now at its highest level in five years, suggesting favorable conditions for first-time homebuying, consistent with the recent rebound in home purchase activity.” 

Buyers shouldn’t expect deep discounts, at least not yet. Unlike the Great Recession, a flood of foreclosures isn’t expected to hit the market, bringing prices down.

Another major reason for the housing market’s rebound is the record-low mortgage interest rates which have created a surge of mortgage applications for home purchases. After a short pullback at the end of June, homebuyers lunged back into the mortgage market to take advantage of record-low mortgage rates. Mortgage applications to purchase a home rose 5% for the week and were a remarkable 33% higher than a year ago, according to the Mortgage Bankers Association’s index, which was seasonally adjusted, including for the Fourth of July holiday.

Information released by the Mortgage Bankers Association showed that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 dropped to 3.26% from 3.29%. Points, including the origination fee, for loans with a 20% down payment decreased to 0.35 from 0.36.

More optimism that came earlier this month was when Black Knight announced that active forbearance plans fell an additional 435,000 weekly, which is the largest drop since the onset of the pandemic. As of July 7, 4.14 million homeowners were in forbearance plans, which represents 7.8% of all active mortgages—down from the prior week’s 8.6%. This represents around $900 billion in unpaid principal. 

Partner with Top-rated Farmington Hills MI REALTOR® – Tom Gilliam 

2020 Best of Farmington Hills REALTOR - Tom GilliamA top-rated Farmington Hills and Oakland County MI real estate agent like Tom Gilliam can show you more properties and save you thousands of dollars when buying a home. You need an agent who knows the area, processes a vast network of local connections, and has the skills to negotiate like a pro.

From first-time homebuyers to multi-million dollar investors, Tom continually strives to provide top quality service for his clients. With access to the most up-to-date MLS listings for Farmington Hills and Oakland County MI properties, Tom is able to match his clients’ lifestyle needs with the perfect home.

If you are ready to list your current property, Tom has the experience and skills necessary to handle the marketing and sale of your home. He employs the latest technology to deliver massive exposure that will drive responses from qualified buyers. Tom also partners with the most talented home stagers to ensure that your home is thoughtfully staged to showcase its features and amenities.

Search the MLS for Properties in Farmington Hills MI

With over 25 years of local real estate experience, Tom will protect your interests, advocate for you, and go the extra mile to ensure a smooth and successful transaction. If you or someone you know is interested in buying or selling real estate in Farmington Hills, MI, or in the Oakland County area, please give top-rated Farmington Hills MI REALTOR® – Tom Gilliam a call today at 248-790-5594 or you can get in touch here.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Call: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

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