As this return to stabilty begins to take hold, the federal government will very likely reduce its aggressive mortgage backing. This is something I have been preaching for several years and many economic and political factors are pointing to 2013-2014 marking either the end or a severe curtailing of that mortgage manipulation by the government.
After hitting a bedrock bottom low on rates in late April and early May, rates have rocketed upwards all month long where they now sit precariously perched on the four percent threshold. To answer the title question; YES, rates are on the rise. I don't think buyers need to panic about four percent, after all, the forty year average sits at around 6.5%.
But as the rate climbs, buyers lose purchasing power in the form higher monthly payments and reduced bank approval values. With prices on the rise this works doubly against buyers entering the market. Higher prices and lower bank approval means much less house is available. Suddenly that four bedroom beauty with 2200 square feet and stone patio that was 220k with a monthly payment of $1600 is no longer in reach and a $180k 1950s three bedroom rambler with 1200 square feet has the same monthly payment.
Here in the Portland OR / Vancouver, WA market we are seeing multiple offers on entry and mid level housing. Builders are starting to come back into the picture, but inventory remains tight. That puts upward pressure on prices. In general we have seen values move between 8-12% over the last twelve months.
If you are a buyer, it is time to pull the trigger and maximize your purchasing power as it is already past its peak. For sellers you may want to contact your favorite Realtor® and have a market analysis done on your home. What was unsellable last year is quite possibly very doable today. Perhaps you have gained back that equity you need to sell.
The bottom line is this; real estate is back. Rents are up and prices although climbing are still low. Buyers should make their move now or resign themselves to a long period of renting. Sellers can enjoy a short marketing time and an opportunity to move up to a house that may have been out of reach in 2006-07 but is affordable now because of market conditions.
The proverb of the day is; Don't let the grass grow under your feet.
Here are some excerpts from a CBS Money Watch article I recently read, click here to see the full article.
By ILYCE GLINK / MONEYWATCH/ May 30, 2013, 11:32 AM
"Fixed mortgage interest rates are at their highest point in more than a year, and aren't showing any signs of changing course.""The thrust behind climbing rates is actually the positive economic news coming out of the housing market this month, and most analysts seem to feel pretty solid in saying that the recovery is here to stay."
"A number of home price indices, from Case-Schiller to Freddie Mac to the National Association of Realtors all show home prices are continuing to increase. Homes sales are also up, despite reports of low inventory."
"While the Federal Reserve has helped keep interest rates low to encourage home buying, the time is coming soon when that kind of artificial manipulation of the market won't be necessary. People are already rushing to buy homes while prices and interest rates remain low. It's only a matter of time before they creep back to the normal six or seven percent."
Here are some excerpts from a CBS Money Watch article I recently read, click here to see the full article.
By ILYCE GLINK / MONEYWATCH/ May 30, 2013, 11:32 AM
"Fixed mortgage interest rates are at their highest point in more than a year, and aren't showing any signs of changing course.""The thrust behind climbing rates is actually the positive economic news coming out of the housing market this month, and most analysts seem to feel pretty solid in saying that the recovery is here to stay."
"A number of home price indices, from Case-Schiller to Freddie Mac to the National Association of Realtors all show home prices are continuing to increase. Homes sales are also up, despite reports of low inventory."
"While the Federal Reserve has helped keep interest rates low to encourage home buying, the time is coming soon when that kind of artificial manipulation of the market won't be necessary. People are already rushing to buy homes while prices and interest rates remain low. It's only a matter of time before they creep back to the normal six or seven percent."