We’ve talked a lot about mortgage rates on the Transparent Mortgage Blog lately, but it’s a good time now to check on what’s been happening with home prices. They seem to be on the rise once again.
Home Price Index Data
CoreLogic released its Home Price Index (HPI) for July 2019 and it was up 3.6 percent in that month on top of the annual increase in June, which was 3.4 percent. Summer is traditionally a busy real estate sales season, especially here in San Diego County. Then you have low interest rates and rising family income, two other key factors leading to more homes being sold at higher prices.
Connecticut and South Dakota were the only two states in the country that didn’t experience annual price gains in 2019. Overall, the month-over-month gain in CoreLogic’s HPI from 2018 to 2019 was up 0.5 percent in July and 0.4 percent in June. Black Knight is another leading research firm and their data confirms similar numbers. They show that the rate of increase in its index rose in July for the first time in 16 months.
What is Driving the Home Prices Up?
We had been seeing home prices skyrocketing upward in the past few years, with San Diego and other parts of Southern California among the fastest risers. However, we had somewhat plateaued in 2019 as the home price growth rate saw significant deceleration. The latest data along with other economic factors would suggest that home prices are on the rise again.
“Sales of new and existing homes this July were up from a year ago, supported by mortgage rates and rising family income,” says Frank Nothaft, Chief Economist for CoreLogic. “With the for-sale inventory remaining low in many markets, the pick-up in buying has nudged price growth up. If low interest rates and rising income continue, then we expect home-price growth will strengthen over the coming year.”
Low inventory does remain a challenge when it comes to the overall number of real estate sales. The buyers are out there because of such great mortgage rates right now, but the demand outweighs the supply. Sellers who are in a comfortable financial position are content to rest on their laurels as their homes continue to gain in value. Meanwhile, many homeowners are also opting to refinance right now. The market conditions are ideal for that with the high home prices and low mortgage rates available.
From a mortgage lending standpoint, this data is interesting. We have definitely seen a large increase in the amount of traditional and cash-out refinances this year, along with plenty of eager home buyers looking to take advantage of the low rates. Getting a great mortgage loan is easy. Finding and buying the ideal home is not. That is why if you are serious about buying in San Diego County, you have to be prepared.
The first step is to get a mortgage pre-approval, not just a basic pre-qualification. Being pre-approved for a home loan will give you a distinct advantage in the market and make your offers look much more attractive to sellers who don’t need to take chances on under-qualified buyers. A mortgage pre-approval letter adds a ton of legitimacy to your offer.
To get started on your loan pre-approval or to discuss your home refinancing options with a knowledgeable San Diego mortgage lending team, call Transparent Mortgage today at (619) 701-3906.