If mortgage rates in San Antonio drop from 6.875% to 5.875%, several key impacts on the housing market are likely:
Increased Buyer Demand: Lower mortgage rates generally make home financing more affordable, leading to increased buyer interest. With rates dropping, monthly payments for homes become more manageable, which can attract more first-time buyers and investors into the market (Norada Real Estate Investments) (The Mortgage Reports).
Potential Rise in Home Prices: As demand increases, home prices may start to rise. This is because more buyers will be competing for the available homes, potentially leading to bidding wars. The current market trends suggest that even a slight decrease in rates could stimulate price growth, as seen in similar markets (San Antonio Current) (The Mortgage Reports).
Inventory Levels and Market Activity: The San Antonio housing market has shown a balanced inventory level, with a significant number of active listings. If rates drop, the increased demand might lead to a quicker turnover of available homes, reducing the time properties spend on the market. This can also encourage more homeowners to list their properties, thereby increasing the overall market activity (Norada Real Estate Investments).
Balanced Market Dynamics: While a rate drop would increase demand, the market's current balance between supply and demand may prevent prices from skyrocketing. However, areas within San Antonio with higher desirability might see more pronounced effects on pricing and competition (San Antonio Current) (The Mortgage Reports).
Overall, a drop in mortgage rates would likely lead to a more competitive market with higher buyer activity, potentially driving up home prices and reducing inventory levels in the San Antonio area. However, the extent of these changes would depend on how significantly the demand increases relative to the supply of homes.