In an ever-changing real estate market it’s important to understand perspective. Whether you’re a first-time home-buyer, a seller, “buying-up”, downsizing, or an experienced real state professional; One’s perspective will not be the same. As a mortgage banker, you could say I have a biased and calculated perspective. I am mostly concerned with how the changing market will impact my clients and their home purchasing power. Rising interest rates, home inventory, and the buyer vs. seller’s market seesaw directly impact my clients and my business. There are a number of different factors that influence my perspective and the real estate market, but I tend to focus on the numbers to help me navigate everything.
Interest Rates are Rising
Interest rates are approaching 5% on average for a 30-Year Fixed Mortgage. This is still historically low, but the Feds are leading everyone to believe that quarterly rate hikes will be the norm into late 2019. The monthly payment on a $275,000.00 loan would increase by just over $125.00 a month/$1500.00 a year if those projections for next year hold true.
Down Payments are Decreasing
Millennial buyers are now the largest living generation of buyers and around 75% of those first-time home buyers are putting less than a 20% down payment towards the purchase of a home. With interest rates being historically low, cash being more valuable invested elsewhere, and mortgage insurance being an affordable option (yes, I said affordable PMI)…buyers are retaining their cash and still getting a much more affordable housing payment than what they have been paying in rent.
Home Prices Continue to Climb
Lower inventories and an affordable housing market has driven the average home price in our area to appreciate between 5-7% in the last few years. This has driven new construction of homes upward, created a hectic multi-offer scenario for buyers, and is forcing sellers to have their homes more “move-in ready” than ever. The forecast is for home prices to continue to rise, but for the market to normalize in the upcoming years with rising rates and supply of inventory increasing.
No matter your perspective, my advice is always the same regardless of the numbers and the current real estate market. A person’s home, one of the largest investments they will manage, warrants a meeting with a trusted professional on a more regular basis than just the weeks leading up to buying or selling your home. I know that I carve out time in my day for a lot less.
Bobby Maloney, Allen Tate Mortgage
NMLS# 690653 – NC/SC