Highlights:
- Lane Hornung addresses rising rates.
- Rates remain low by historical standards.
- Rates and home prices may rise even more.
Lane Hornung
In May, mortgage rates started to rise from their historical lows and now are hovering around 4.5 percent, more than a full percentage point higher than they were at the absolute bottom. However, they are still low by historical standards.
An analysis by InsideRealEstateNews of more than four decades of interest rate data, found the average 30-year, fixed-rate loan at the end June was 8.56 percent.
What do rising rates mean for today?s homebuyer? A look at options for a prospective homebuyer in today?s market is the subject of this month?s conversation between Lane Hornung, founder and President of 8z Real Estate, and John Rebchook, of InsideRealEstateNews.com.
John: Lane, what is house-hunting like today for someone who has been searching for a home for a few months, but still hasn?t landed one?
Lane: It could be a bit frustrating. Let?s say you were pre-qualified for a $300,000 home earlier this year and you started looking. You may have been out-bid and lost out on a listing or two that you really wanted. Now, your buying power has been eroded because of rising interest rates.
John: What does that mean for the consumer?
Lane: It?s a double whammy. Instead of a $300,000 home, you may now only qualify for a $270,000 home due the increase in rates. The second part of the double whammy is that homes prices have been rising. A home priced at $300,000 at the beginning of the year might now cost $315,000 or $330,000.
John: What are some of the options for this theoretical homebuyer?
Lane: One option, of course, is to take your ball and go home and get out of the market.
John: Is that a good idea?
Lane: Not necessarily, assuming you are buying for the right reasons. That is, you truly want or need a house and plan to stay in the house for a number of years. In some ways, throwing in the towel is an emotional decision borne out of missing the absolute bottom. It may not be the most rational decision, financially speaking, if you really want a home.
John: Can a prospective buyer count on a better time to buy in the future, with the idea that rising rates and more inventory will drive down prices?
Lane: It is very hard to time any market, whether it is the housing market or the stock market. Does the housing market care that you gave up? No, it does not.
John: Do you think we will ever see rates around 3.3 percent again?
Lane: If I were going to place a bet, I think it is more likely that rates will go higher, rather than fall back to their all-time lows. Also, keep in mind that a 4.5 percent rate, historically speaking, is a great rate.
Rising rates always knock some people out of the market and hurt affordability. On the other hand, rising rates can mean that the economy is getting better. If people have more money, and consumer confidence rises, that will increase the demand for housing.
John: So people can?t count on rates and or housing prices being lower a year from now?
Lane: Of course, nobody knows. Typically, real estate markets follow five-to-seven-year cycle and we are a couple of years into that cycle. That could mean that a year from now that $300,000 home is even more expensive than today, and interest rates are higher. If that is the case, you are only hurting yourself by waiting.
John: What are some of the options for someone who is prequalified for a $300,000 home?
Lane: One thing they could do is lower their expectations and buy a $270,000 home. Another option a good broker may suggest is a different neighborhood that is not quite as expensive as where they were previously looking,but close to those expectations.
John: How about an adjustable rate mortgage?
Lane: An ARM can be a very good choice, especially if you only plan to stay for 5 to 7 years. I?ve seen some very attractive ARMs recently. They are already starting to fill the void caused by rising fixed-rates.
John: Thanks, Lane.
8z Real Estate?is a sponsor of InsideRealEstateNews.com along with?Universal Lending?and?Land Title Guarantee, A monthly Q&A with Lane Hornung is a feature of IREN.?
Have a story idea or real estate tip? Contact John Rebchook at? JRCHOOK@gmail.com. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.
?
Source: http://insiderealestatenews.com/2013/07/31/hornung-rates-remain-low/
College Football Scoreboard nfl scores nfl scores Devon Walker Tom Cruise ryan reynolds Star Trek: The Original Series
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.