Increasingly low mortgage rates are bringing out more and more buyers, however those buyers have more options than they used to and are taking longer to make decisions on properties. It’s crucial to be priced right, or even just below what feels ‘right’ to receive offers. As buyers sat on the sidelines, July 2019 saw historically low figures with closings down 36% from July 2018. Having said that, our team has had a very active start to August, a typically slow month, on both the sales and leasing fronts. We’ll have to wait and see how the rest of the month shakes out.
Mortgage Rates: The 30-year fixed-rate mortgage fell to 3.6%, down from nearly 5% in November. Mortgage rates are closely linked to yields on 10-year Treasury notes, which on 8/9 fell to 1.675%, the lowest since October 2016. You’d think with such low mortgage rates, roaring financial markets, and price drops across the real estate market, it is quite puzzling why more buyers aren’t taking advantage right now. Look no further than the US-CHINA trade war, the Argentinian currency collapse, Hong Kong rioting, Brexit, growing debt and deficits, slowing GDP, local political upheaval, etc......that's a lot all at once and keeping buyers distracted.
Refinancing: Refinance applications were up a stunning 116% last week compared with a year ago, according to the Mortgage Bankers Association. Millennials were especially reactive to the rate drop. In June 2018, just 8% of millennial mortgage applications were to refinance; the rest were to buy a home. This June that jumped to 14%.
Opportunity Zones: While there is still plenty of uncertainty about the program, last year’s new Opportunity Zones program provides tax incentives to developers who invest in historically distressed neighborhoods throughout the U.S. There are 8,700 communities that have been designated as Opportunity Zones across the U.S., 306 of which are located in New York. These Opportunity Zones benefits are intended to spur investment in places institutional money might have historically overlooked. In turn, the entrance into these areas with new development would help local communities and businesses.
Compass Series G: July ended with big news for Compass as our CEO, Robert Reffkin, announced our Series G financing round of $370 million in new capital. This round includes new investor Dragoneer Investment Group, (which has invested in companies like Slack, Uber and DoorDash), as well as long-time partners, such as the Canada Pension Plan Investment Board (CPPIB) and the Softbank Vision Fund, who are reaffirming their continued belief in Compass’ strategy and success. This round will be used to invest in current markets, not expanding further, as well as tools and programs for clients, like Concierge.