The Current State Of The Housing Market -
JULY 19, 2013
According to a recent online survey by the real estate research firm Trulia, almost half of the participants who plan to buy a home are worried most about rising interest rates. The cost of housing is rising, and the inventory of homes to buy is shrinking. Adding the recent rise in rates to this equation has the potential to hurt the housing recovery by scaring homebuyers out of the market.
Rates are the wild card in home buying today. While you don’t need the “crystal ball” to know that rates are on the upswing, the violent turn of the market over the past few weeks did take some potential homebuyers by surprise. For our younger, first time, homebuyer generation, going from a rate below 3.5% to something above 4.00% was a significant event. For those of you more seasoned in the process of mortgages, you know that almost anything below 6% feels like a gift. There was a time that rates below double digits would cause a refinance frenzy! Let’s break this down to the actual dollars and cents. If a borrower was purchasing a home with a loan amount of $200,000 on a 30 year fixed rate loan with the rate of 3.5%, the monthly principle and interest (P&I) would be $898.09. If that rate increased to 4.0% the P&I would be $954.83. That is a difference of $56.74 per month – not a small amount of money, but still less than the cost of a family dinner at the kids’ favorite restaurant. No one likes to see the costs of anything go up, but paying a little more each month to have the benefits of homeownership seems like a good trade off. At least you get something extra for your money: tax incentives, a place to call your own and the knowledge that you are buying in a growing economy. Rates may not be at the historic lows anymore, but they are certainly extremely attractive and home prices are rising which means equity in your home is happening.
If you are currently in the market, you are aware of our local inventory for the type and price range you are seeking. The market is very busy, and the length of time a home remains on the market (if it is priced right) has been sharply reduced. It’s back to good times but at a much more realistic price point. Don’t risk missing the opportunity to buy because you have heard rates are up – get the facts and see how we can help you!
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Posted by Pam Woodall