However, some real estate developers have implemented measures to stimulate housing demand by lowering mortgage interest rates and housing prices, particularly in the new residential market. This approach has to some extent enhanced the purchasing power of buyers and fueled the growth of sales in new residential properties.
Mortgage interest rates have a significant impact on the purchasing choices of homebuyers. The current average 30-year fixed mortgage rate stands at 7.76%, making the cost of homeownership unaffordable for many buyers. Specifically, for homes with a median price of $400,000, buyers would need an income of at least $120,000 to afford monthly payments, posing a significant challenge for many households.
Therefore, reducing mortgage interest rates can partly address the issue of buyers' affordability and stimulate housing demand.
Real estate developers are stimulating housing demand by lowering housing prices. With soaring current housing prices, the purchasing power of buyers has been constrained. Therefore, some developers opt to lower housing prices to attract more buyers.
Additionally, some developers are offering special sales incentives such as paying points to lower the mortgage interest rates and monthly payments for buyers. These practices have improved the purchasing power of buyers to a certain extent and promoted the growth of the new residential market.
Despite a contraction in the sales of existing homes, the new residential market is exhibiting a growth trend. This contrast is partially due to real estate developers flexibly responding to market changes by reducing mortgage interest rates and housing prices to stimulate housing demand.
For example, some renowned developers offer mortgage interest rates as low as around 4%, and some even provide adjustable-rate mortgages at 3.99%, which undoubtedly brings tangible benefits to homebuyers.
It should be noted that lowering housing prices may result in some compromises in terms of quality or space, as some developers may construct smaller homes to reduce costs. Therefore, while enjoying price concessions, homebuyers also need to carefully consider the actual value and suitability of the properties.
