August 6, 2020 | Market Update

Market News 8-7-2020

Mortgage Market Update

Mortgage Rates Hover at Historic Lows

Mortgage rates continue to hover at near historic lows according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS®). Interest rates on 30 year fixed-rate mortgages averaged 2.99% for the week ending July 30, 2020 – slightly lower than the previous week’s 3.01%. Interest rates at this same time last year averaged 3.75%. “It’s Groundhog Day in the mortgage market as rates continue to remain near historic lows, driving purchase demand over 20 percent above a year ago,” said Sam Khater, Freddie Mac’s Chief Economist. “Real estate is one of the bright spots in the economy, with strong demand and modest slowdown in home prices heading into the late summer. Home sales should remain strong the next few months into the early fall.”3

Garages – the new affordable house?

With the ever-increasing price of rent across major cities, more and more people across the globe are turning the idea of renting out their garage as a living space into reality. These Accessory Dwelling Units, or ADUs, have become increasingly popular in large cities, such as Los Angeles, over the last few years. In 2016 Los Angeles had 117 new garage conversion permits issued, however in 2018 after a change in regulation, 4,171 new garage conversion permits were granted. Cherry Tung, a YouTuber living in L.A. said the biggest reason she chose to live in a garage conversion as opposed to a normal apartment is the price. Her rent at $950 a month is quite a bit less than the typical $2,000 in her area. Some also believe garage conversions are a great way to help solve homelessness in major cities. Los Angeles mayor Eric Garcetti said, “We thought, what a great way to add to the many strategies that we have to try to end homelessness in LA to try to match folks who are building these units with folks who are coming off the streets.” L.A.’s goal is to “house at least 200 housing-insecure people across nearly 150 ADUs” according to Garcetti’s press secretary, Alex Comisar.4

Sources: 3Freddie Mac, 4BBC