Are you on the fence about selling your home?
If you are thinking about selling your home this spring, think no more, and sell today! It is important to focus on mortgage rates because they have a direct influence on real estate prices. That said, it’s important to note that changing interest rates affect numerous aspects of real estate.
Rates are still historically low, drawing buyers into the market
We may not be enjoying the rock-bottom interest rates of yore, but by historical standards, today’s 30-year mortgage rates—hovering just above 4%—are still low. And experts agree mortgage credit will remain relatively cheap for most of the year.
That means the getting’s still good for buyers—and, subsequently, for sellers looking to unload their homes.
But rates are on the rise, and it’s been widely predicted that they’ll reach 5% before year’s end. Buyers know that the longer they wait to buy, the more expensive it will be.
Roughly translated, that means you’d be wise to list your home earlier in the year, before more rate hikes kick in. Not only will you capture the market of buyers scurrying to close a deal, but if you’re buying after you sell, you’ll also benefit from those lower rates.
Mortgage interest rates have already risen by over a quarter of a percentage point in 2018. Many are projecting that rates could increase to 5% by the end of the year.
Many quickly jump to the conclusion that an increase in mortgage rates will have a detrimental impact on real estate prices as fewer buyers will be able to qualify for a loan. This seems logical; if there is less demand for housing then prices will drop.
However, in a good economy, rising mortgage rates increase demand as many prospective purchasers immediately jump off the fence to guarantee they get the lower rate.
Let’s look at home prices the last four times mortgage rates increased dramatically.
In each case, home prices APPRECIATED and did not depreciate. No one is projecting as dramatic an increase in rates as the examples above. Most are projecting an increase of approximately 1% by the end of the year.
The last time mortgage rates increased by 1% over a twelve-month period was January 2013 (3.41%) to January 2014 (4.43%). What happened to house prices during that span? They appreciated by 9.8%.
Just two weeks ago, Rick Palacios Jr., Director of Research at John Burns Real Estate Consulting explained:
“Mortgage rates have risen 1% or more ten times in the last 43 years, with little impact on home sales and prices when the economy was also strong…Historically, rising confidence, solid job growth, and higher wages have more than offset reduced demand for housing resulting from higher mortgage rates.”
When mortgage rates increase, history has shown that prices appreciate (and do not depreciate) during that same time span.
If you have any questions or want more information, get in contact with me TODAY at 951.704.6370 or Kristi@KristiHardenRealEstate.com
*Information provided by kcm.com and realtor.com