Mortgage rates dropped to a record low last week, averaging 2.86 percent for a 30-year fixed-rate loan. This marks the ninth time in 2020 that mortgage rates have hit a new floor. At the same time, mortgage credit availability shrunk to a six-year low in August, meaning lending standards have tightened.
Buyer demand still remains high, with mortgage applications up 40 percent from a year ago. California REALTORS® surveyed by C.A.R. reported encouraging business results last week, though optimism about future slides slipped modestly.
Demand continues to surge in “Zoom towns,” smaller, more affordable markets outside of bigger metropolitan areas that have become more popular as more people have been working remotely. A new study from Zillow found that nearly 2 million American renters could become homebuyers if they were able to work remotely and move to a less expensive area.
Meanwhile, the number of homes for sale nationwide is in record low territory, with some of the more affordable areas seeing the biggest drops in inventories. In Q2 2020, iBuying activity on the part of RedfinNow, Offerpad, Opendoor and Zillow plummeted 88 percent. But now, with activity resumed, Opendoor is reportedly in talks to go public through a merger with Social Capital Hedosophia Holdings Corp. II, a company that acquires other companies in order to take them public.
Sources: MSN Money, REALTOR® Magazine, C.A.R. Research & Economics, NPR, Inman News, Mortgage Professionals of America, HousingWire, Redfin