The big news in residential real estate is that interest rates are rising, and it is becoming incrementally more expensive to borrow money for your home. In late March, the Federal Reserve raised interest rates for the 15th consecutive time since June of 2004, pushing it a full 1 percent higher to where it currently resides at 4.75 percent.
How does this affect our Market?
This is a complicated question and not many can agree on an answer. Some believe that rising interest rates will slow the real estate market, due to the fact that homeowners will have less 'buying-power' than compared to years past and prices will correct due to the oversupply of unsold homes. Others estimate that rising incomes, a robust economy and the continued housing demand in the form of second-homes will allow the market to hold the value that has swelled over past years.
Days On Market
At press time, 50% more homes are currently listed for-sale than compared to the same time in 2005. Traditionally, inventory continues to increase through May and into August. If this happens with the current state of inventory, homes will take much longer to sell than the average of two months and sales prices might soften 5% to 10%. However, with the large amount of movement in the marketplace over the past few years, many families may be content with where they live and stay put, keeping inventory under control and sales prices stable.
Adjustable Rate Mortgages
The creeping interest rates will impact those homeowners who chose an adjustable-rate mortgage, a loan which costs its owner more as interest rates move upward. Since the ARM loans provide a lower total payment and a solution to the high home prices, they have become the most popular type of mortgage, accounting for 67% of loans in San Diego County (National Association of Realtors). If the Homeowners plan to stay in their homes past their adjustment period and feel that a mortgage rate above 7.5% might be difficult to afford, it might be best to consider options such as refinancing to a longer-term loan.
Cost of Refinancing
Lenders may charge an upfront fee, which is usually a percentage of the money being lent. This will compensate the broker for their time and efforts in arranging the loan for you, advice and counseling given and preparing the property paperwork for the loan. There are a variety of additional fees expressed in flat fees charged by the lender, but most of these are negotiable. The costs should be similar to those of obtaining your original home loan, which typically run between 2% and 4% of the total amount of the home loan.
Current Market Status
In Carlsbad, buyers have emerged in the usual numbers, but compared with the locus-like rush of markets of recent years, they are less pressured to act quickly and are more choosey. Homes are still selling at a great pace. From January to April, 233 single family homes recorded in the MLS and a great number of new construction sales as well. Homes can still sell in a few weeks; however, the property must stand out above its current competition. Buyers are comparison-shopping. As some properties languish on the market, and it is not necessarily a function of a slowing market, but rather that buyers cannot find the reason to pay the current asking price for what the property offers.
For more information Email Tyson at [email protected] or call (760) 431-3338.
How does this affect our Market?
This is a complicated question and not many can agree on an answer. Some believe that rising interest rates will slow the real estate market, due to the fact that homeowners will have less 'buying-power' than compared to years past and prices will correct due to the oversupply of unsold homes. Others estimate that rising incomes, a robust economy and the continued housing demand in the form of second-homes will allow the market to hold the value that has swelled over past years.
Days On Market
At press time, 50% more homes are currently listed for-sale than compared to the same time in 2005. Traditionally, inventory continues to increase through May and into August. If this happens with the current state of inventory, homes will take much longer to sell than the average of two months and sales prices might soften 5% to 10%. However, with the large amount of movement in the marketplace over the past few years, many families may be content with where they live and stay put, keeping inventory under control and sales prices stable.
Adjustable Rate Mortgages
The creeping interest rates will impact those homeowners who chose an adjustable-rate mortgage, a loan which costs its owner more as interest rates move upward. Since the ARM loans provide a lower total payment and a solution to the high home prices, they have become the most popular type of mortgage, accounting for 67% of loans in San Diego County (National Association of Realtors). If the Homeowners plan to stay in their homes past their adjustment period and feel that a mortgage rate above 7.5% might be difficult to afford, it might be best to consider options such as refinancing to a longer-term loan.
Cost of Refinancing
Lenders may charge an upfront fee, which is usually a percentage of the money being lent. This will compensate the broker for their time and efforts in arranging the loan for you, advice and counseling given and preparing the property paperwork for the loan. There are a variety of additional fees expressed in flat fees charged by the lender, but most of these are negotiable. The costs should be similar to those of obtaining your original home loan, which typically run between 2% and 4% of the total amount of the home loan.
Current Market Status
In Carlsbad, buyers have emerged in the usual numbers, but compared with the locus-like rush of markets of recent years, they are less pressured to act quickly and are more choosey. Homes are still selling at a great pace. From January to April, 233 single family homes recorded in the MLS and a great number of new construction sales as well. Homes can still sell in a few weeks; however, the property must stand out above its current competition. Buyers are comparison-shopping. As some properties languish on the market, and it is not necessarily a function of a slowing market, but rather that buyers cannot find the reason to pay the current asking price for what the property offers.
For more information Email Tyson at [email protected] or call (760) 431-3338.