Interest Rates Archives - Your Key 2 Real Estate

What Are the Real Reasons You Want To Move Right Now?

by Smilingruby | Oct 18, 2023 | Demographics, Interest Rates, Sellers, Selling Myths

If you’re considering selling your house right now, it’s likely because something in your life has changed. And while things like mortgage rates play a big role in your decision, you don’t want that to overshadow why you thought about making a move in the first place.

It’s true mortgage rates are higher right now, and that has an impact on affordability. As a result, some homeowners are deciding they’ll wait to sell because they don’t want to move and have a higher mortgage rate on their next home.

But your lifestyle and your changing needs matter, too. As a recent article from Realtor.com says:

“No matter what interest rates and home prices do next, sometimes homeowners just have to move—due to a new job, new baby, divorce, death, or some other major life change.”

Here are a few of the most common reasons people choose to sell today. You may find any one of these resonates with you and may be reason enough to move, even today.

Relocation

Some of the things that can motivate a move to a new area include changing jobs, a desire to be closer to friends and loved ones, wanting to live in your ideal location, or just looking for a change in scenery.

For example, if you just landed your dream job in another state, you may be thinking about selling your current home and moving for work.

Upgrading

Many homeowners decide to sell to move into a larger home. This is especially common when there’s a need for more room to entertain, a home office or gym, or additional bedrooms to accommodate a growing number of loved ones.

For example, if you’re living in a condo and your household is growing, it may be time to find a home that better fits those needs.

Downsizing

Homeowners may also decide to sell because someone’s moved out of the home recently and there’s now more space than needed. It could also be that they’ve recently retired or are ready for a change.

For example, you’ve just kicked off your retirement and you want to move somewhere warmer with less house to maintain. A different home may be better suited for your new lifestyle.

Change in Relationship Status

Divorce, separation, or marriage are other common reasons individuals sell.

For example, if you’ve recently separated, it may be difficult to still live under one roof. Selling and getting a place of your own may be a better option.

Health Concerns

If a homeowner faces mobility challenges or health issues that require specific living arrangements or modifications, they might sell their house to find one that works better for them.

For example, you may be looking to sell your house and use the proceeds to help pay for a unit in an assisted-living facility.

With higher mortgage rates and rising prices, there are some affordability challenges right now – but your needs and your lifestyle matter too. As a recent article from Bankrate says:

“Deciding whether it’s the right time to sell your home is a very personal choice. There are numerous important questions to consider, both financial and lifestyle-based, before putting your home on the market. . . . Your future plans and goals should be a significant part of the equation . . .”

Bottom Line

If you want to sell your house and find a new one that better fits your needs, let’s connect. That way, you’ll have someone to guide you through the process and help you find a home that works for you.

Are Higher Mortgage Rates Here To Stay?

by Smilingruby | Oct 16, 2023 | Buyer Myths, Buyers, First Time Home Buyers, Housing Market Updates, Interest Rates

Mortgage rates have been back on the rise recently and that’s getting a lot of attention from the press. If you’ve been following the headlines, you may have even seen rates recently reached their highest level in over two decades (see graph below):

That can feel like a little bit of a gut punch if you’re thinking about making a move. If you’re wondering whether or not you should delay your plans, here’s what you really need to know.

How Higher Mortgage Rates Impact You

There’s no denying mortgage rates are higher right now than they were in recent years. And, when rates are up, that affects overall home affordability. It works like this. The higher the rate, the more expensive it is to borrow money when you buy a home. That’s because, as rates trend up, your monthly mortgage payment for your future home loan also increases.

Urban Institute explains how this is impacting buyers and sellers right now:

“When mortgage rates go up, monthly housing payments on new purchases also increase. For potential buyers, increased monthly payments can reduce the share of available affordable homes . . . Additionally, higher interest rates mean fewer homes on the market, as existing homeowners have an incentive to hold on to their home to keep their low interest rate.”

Basically, some people are deciding to put their plans on hold because of where mortgage rates are right now. But what you want to know is: is that a good strategy?

Where Will Mortgage Rates Go from Here?

If you’re eager for mortgage rates to drop, you’re not alone. A lot of people are waiting for that to happen. But here’s the thing. No one knows when it will. Even the experts can’t say with certainty what’s going to happen next.

Forecasts project rates will fall in the months ahead, but what the latest data says is that rates have been climbing lately. This disconnect shows just how tricky mortgage rates are to project.

The best advice for your move is this: don’t try to control what you can’t control. This includes trying to time the market or guess what the future holds for mortgage rates. As CBS News states:

“If you’re in the market for a new home, experts typically recommend focusing your search on the right home purchase — not the interest rate environment.”

Instead, work on building a team of skilled professionals, including a trusted lender and real estate agent, who can explain what’s happening in the market and what it means for you. If you need to move because you’re changing jobs, want to be closer to family, or are in the middle of another big life change, the right team can help you achieve your goal, even now.

Bottom Line

The best advice for your move is: don’t try to control what you can’t control – especially mortgage rates. Even the experts can’t say for certain where they’ll go from here. Instead, focus on building a team of trusted professionals who can keep you informed. When you’re ready to get the process started, let’s connect.

People Want Less Expensive Homes – And Builders Are Responding

by Smilingruby | Aug 17, 2023 | Buyers, Housing Market Updates, Interest Rates, Pricing

In today’s housing market, there are two main affordability challenges impacting buyers: mortgage rates that are higher than they’ve been the past couple of years, and rising home prices caused by low inventory. To overcome those challenges, many people are working with their agents to find less expensive homes. And with newly built homes making up a historically large percentage of the total available inventory today, that search often includes brand new homes.

People Are Spending Less on Newly Built Homes

The graph below uses the latest information from the Census to show, in June, more of the newly built home sales in this country were in lower price ranges than in 2022:Last year, only 58% of newly built home sales were less than $500,000. This June, that number was up to 65%. This means more people are buying less expensive newly built homes right now while affordability remains a challenge.

Builders Are Offering Lower-Cost Options

Builders have picked up on this trend and are reacting accordingly. George Ratiu, Chief Economist at Keeping Current Matters, explains:

“Builders are also responding to this shift by bringing slightly smaller homes to market in an effort to meet lower price points . . .”

New data from the Census further confirms this pattern – it shows the median sales price of newly built homes has dipped down in recent months (see graph below):And as Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, says, the builders who are most responsive to this trend are forming pathways to homeownership:

“. . . it is creating opportunities for people to be able to afford an entry-level home in an area. . . . if you get that size down, that automatically will make it a more affordable home. The [builders] that are decreasing [size] the most are probably the ones that try to build more of an affordable product.”

How an Agent Can Help

Builders producing smaller, less expensive newly built homes give you more affordable options at a time when that’s really needed. If you’re hoping to buy a home soon, partner with a local real estate agent to find out what’s available in your area. An agent can help you look at newly built homes or ones under construction nearby.

Bottom Line

If you’re having a hard time finding a home you like in your budget, let’s connect. You need a real estate professional who knows all about the latest inventory in our area, including homes still under construction or just built. That way you have an expert on your side who can provide information on builder reputations, builder contracts and negotiations, and more to help you with the homebuying process.

How Inflation Affects Mortgage Rates

by Smilingruby | Aug 3, 2023 | Buyers, Housing Market Updates, Interest Rates, Move-up Buyers

When you read about the housing market in the news, you might see something about a recent decision made by the Federal Reserve (the Fed). But how does this decision affect you and your plans to buy a home? Here’s what you need to know.

The Fed is trying hard to reduce inflation. And even though there’s been 12 straight months where inflation has cooled (see graph below), the most recent data shows it’s still higher than the Fed’s target of 2%:

While you may have been hoping the Fed would stop their hikes since they’re making progress on their goal of bringing down inflation, they don’t want to stop too soon, and risk inflation climbing back up as a result. Because of this, the Fed decided to increase the Federal Funds Rate again last week. As Jerome Powell, Chairman of the Fed, says:

“We remain committed to bringing inflation back to our 2 percent goal and to keeping longer-term inflation expectations well anchored.”

Greg McBride, Senior VP, and Chief Financial Analyst at Bankrate, explains how high inflation and a strong economy play into the Fed’s recent decision:

“Inflation remains stubbornly high. The economy has been remarkably resilient, the labor market is still robust, but that may be contributing to the stubbornly high inflation. So, Fed has to pump the brakes a bit more.”

Even though a Federal Fund Rate hike by the Fed doesn’t directly dictate what happens with mortgage rates, it does have an impact. As a recent article from Fortune says:

“The federal funds rate is an interest rate that banks charge other banks when they lend one another money . . . When inflation is running high, the Fed will increase rates to increase the cost of borrowing and slow down the economy. When it’s too low, they’ll lower rates to stimulate the economy and get things moving again.”

How All of This Affects You

In the simplest sense, when inflation is high, mortgage rates are also high. But, if the Fed succeeds in bringing down inflation, it could ultimately lead to lower mortgage rates, making it more affordable for you to buy a home.

This graph helps illustrate that point by showing that when inflation decreases, mortgage rates typically go down, too (see graph below):

As the data above shows, inflation (shown in the blue trend line) is slowly coming down and, based on historical trends, mortgage rates (shown in the green trend line) are likely to follow. McBride says this about the future of mortgage rates:

“With the backdrop of easing inflation pressures, we should see more consistent declines in mortgage rates as the year progresses, particularly if the economy and labor market slow noticeably.”

Bottom Line

What happens to mortgage rates depends on inflation. If inflation cools down, mortgage rates should go down too. Let’s talk so you can get expert advice on housing market changes and what they mean for you.

Your Needs Matter More Than Today’s Mortgage Rates

by Smilingruby | Jun 13, 2023 | Buyers, Interest Rates, Move-up Buyers, Sellers

What if? What if you could be living your dream instead of just thinking about it? Making your dreams come true takes courage and taking steps forward to realize that dream. What’s your next step? If you’re ready to sell your house, let’s connect and get you MOVING!

If you’re thinking about selling your house right now, chances are it’s because something in your life has changed. And, while things like mortgage rates are a key part of your decision on what you’ll buy next, it’s important to not lose sight of the reason you want to make a change in the first place.

It’s true mortgage rates have climbed from the record lows we saw in recent years, and that has an impact on affordability. With rates where they are right now, some homeowners are deciding they’ll wait to sell because they don’t want to move and have a higher mortgage rate on their next home. As Danielle Hale, Chief Economist at Realtor.com, explains:

“. . . homeowners who locked in a 30-year fixed rate in the 2-3% range don’t necessarily want to give that up in exchange for a rate in the 6-7% range.”

But your lifestyle and your changing needs should matter more. Here are a few of the most common reasons people choose to sell today. Any one of these may be more important than keeping your current mortgage rate.

As Ali Wolf, Chief Economist at Zonda, says in a recent tweet:

“First-time and move-up buyers are both active . . . the latter driven by life changes. Divorce, marriage, new higher paid job, and existing home unsuitable all referenced.”