New insights.

According to a new report from Freddie Mac, 30-year mortgage rates are projected to gradually decline in coming quarters, which could trigger a surge in buyer demand, primarily from first timers. However, a tight inventory will lead to only moderate sales increases, with prices rising 2.1% in 2024.

Meanwhile, boosted by an “AI boom,” median sales prices in the San José metro area are the first to exceed $2 million, and Silicon Valley’s appreciation rate is among the highest in the nation. Overall, 89% of U.S. metro areas saw year-over-year price gains.

A Spectacular Investment

If you’re young or living on a tight budget, renting a home makes a lot of sense. But there’s no substitute for the power of homeownership to build wealth and financial security. So how do you get the most out of your investment?

CHIC (Pearl)

The benefits of ownership vastly outweigh the upsides of renting, especially over the long term. According to the S&P CoreLogic Case-Shiller Index, home prices in the San Francisco Metro Area rose a whopping 375% from 1990 to 2021, and every mortgage payment builds your equity and allows you to leverage more of that value. Speaking of payments, instead of basically throwing money away on rents that increase with inflation, a fixed rate mortgage locks in your monthly budget for the duration of the loan. You can also deduct interest payments on your tax return and take advantage of other tax incentives. And if you don’t need the home, you can always rent it out and get an even greater return!

GEEK (Kevin)

No matter if you’re buying to occupy or rent, the home you purchase should fit your life goals — and your monthly budget. Buying your dream home might not make sense if you’re starting a family or embarking on a new career. Quick turnarounds can also get you into trouble responding to market fluctuations instead of betting on trends. And it’s incredibly tempting to borrow against your growing equity to pay for non-essentials like a new car when you should be accruing wealth and setting yourself up for the future. A better option would be to consider refinancing as mortgage rates decline. You could also think about maintaining a “rainy day” reserve fund for those unexpected curve balls life likes to throw.

Buying a home is a deeply personal decision and possibly the most significant financial transaction you will ever make. We’re here to help, but in the end, it’s your future — and your choice!

The 30-Year Fixed Dance

After peaking around 7.8% in October 2023, weekly average rates on 30-year fixed mortgages were just under 6.9% in the first week of March 2024. Any other time, we’d be singing from the rooftops, but we’re nowhere near the historic lows we saw just a few years ago. Still, any relief is good news.

Mortgage rates on the decline.

According to the folks at Freddie Mac, average interest rates on a 30-year fixed-rate mortgage fell to 6.61% last week, the ninth consecutive week of decline, but still higher than one year ago (6.42%). Economic experts expect further declines heading into 2024, although the current dip has yet to spur an uptick in home sales due to a lack of inventory.

Here's a look at how key economic indicators fared in 2023:

The interest rate long game

Despite a huge spike in mortgage interest rates buyers are still actively shopping for their next homes. And even though inventory remains sparse, current rates are pressuring some sellers to lower their prices to make their homes more affordable. Recent national data found that 5.9% of homes for sale in August experienced price cuts, and September saw even more sellers (6.5%) posting reduced prices.