In this month’s real estate market update I wanted to add one of the most important topics in the real estate housing market right now: the impact of rising mortgage rates on the housing market. So let’s get started.
So what I’m going to start with is a look at how mortgage rates have been rising this year. This is data from Freddie Mac, and it goes back to the very beginning of this year. What you can see on the left is that mortgage rates started out at 3.11% for the average 30 years fixed at the beginning of the year, and they have just steadily climbed since then, up to 4.76% is the latest data that we’re looking at right now. So as of the very end of March, average 30 year fixed at 4.67%.
According to FreddieMac...
“History suggests that when rates rise, there is an initial bump in home prices, as many move quickly to buy a home before rates increase further. But after that period, home prices slow. Freddie Mac analysis shows that a 1% increase in mortgage rates results in home price appreciation that is four percentage points lower. For instance, a 1% increase in mortgage rates would change home price growth from 11% to 7%.”
So what is Freddie Mac saying? We certainly feel that home price appreciation will slow. Mortgage rates will slow some of the frenzy. But we’re not talking about depreciation. We’re talking about a softening, a deceleration. And that will help slow some of the frenzy as we move forward in the housing market.
So What Does This Mean For Buyers and Sellers?
We still are seeing very, very low inventory. It’s a huge deficit. And when inventory is that low, we tend to see home prices projected to continue rising, because there just aren’t enough homes for sale. So when we think about home prices rising and home sales, we also are seeing plenty of buyers in the market. It’s really a matter of buyers can’t find a home to buy. There’s not enough inventory to do that. So when you see headlines about a softening in home sales at any point right now, it’s not because of rising mortgage rates. It’s because there aren’t enough homes to buy. And buyers who want to buy aren’t able to find them right now. It is more important than ever for buyers to go in strong with an offer and have all their ducks in a row. You might not get a second chance. When you work with First Coast Realty, you get a team of network individuals standing by to make sure you dreams of homeownership become a reality.
To the sellers out there yes the market is strong but you still want to make sure you are maximizing your investment. There are many options out there including not going through a Realtor to save money but the numbers just don’t match up. Statistics show that often the seller in these deals are leaving money on the table. Call First Coast Realty to receive a complimentary Broker’s Price Opinion.
Whether you are looking to buy or sell, First Coast Realty would welcome the opportunity to earn your business. Feel free to reach out to us on Facebook or Twitter and we would be happy to assist you in getting the ball rolling. Or, to talk to a qualified, experienced agent call/text today 904-494-8408 or email info@firstcoastrealtyinc.com
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