The Cost of Waiting for Mortgage Rates To Go Down

by | Oct 4, 2022 | Buyers, First Time Home Buyers, Housing Market Updates, Interest Rates, Move-up Buyers

The Cost of Waiting for Mortgage Rates To Go Down | MyKCM

Mortgage rates have increased significantly in recent weeks. And that may mean you have questions about what this means for you if you’re planning to buy a home. Here’s some information that can help you make an informed decision when you set your homebuying plans.

The Impact of Rising Mortgage Rates

As mortgage rates rise, they impact your purchasing power by raising the cost of buying a home and limiting how much you can comfortably afford. Here’s how it works.

Let’s assume you want to buy a $400,000 home (the median-priced home according to the National Association of Realtors is $389,500). If you’re trying to shop at that price point and keep your monthly payment about $2,500-2,600 or below, here’s how your purchasing power can change as mortgage rates climb (see chart below). The red shows payments above that threshold and the green indicates a payment within your target range.

The Cost of Waiting for Mortgage Rates To Go Down | MyKCM

As the chart shows, as rates go up, the amount you can afford to borrow decreases and that may mean you have to look at homes at a different price point. That’s why it’s important to work with a real estate advisor to understand how mortgage rates impact your monthly mortgage payment at various home loan amounts.

Are Mortgage Rates Going To Go Down?

The rise in mortgage rates and the resulting decrease in purchasing power may leave you wondering if you should wait for rates to go down before making your purchase. Realtor.com says this about where rates could go from here:

“Many homebuyers likely winced . . . upon hearing that the Federal Reserve yet again boosted its short-term interest rates by three-quarters of a percentage point—a move that’s pushing mortgage rates through the roof. And the already high rates are just going to get higher.”

So, if you’re waiting for mortgage rates to drop, you may be waiting for a while as the Federal Reserve works to get inflation under control.

And if you’re considering renting as your alternative while you wait it out, remember that’s going to get more expensive with time too. As Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), says:

“There is no doubt that these higher rates hurt housing affordability. Nevertheless, apart from borrowing costs, rents additionally rose at their highest pace in nearly four decades.”

Basically, it is true that it costs more to buy a home today than it did last year, but the same is true for renting. This means, either way, you’re going to be paying more. The difference is, with homeownership, you’re also gaining equity over time which will help grow your net worth. The question now becomes: what makes more sense for you?

Bottom Line

Each person’s situation is unique. To make the best decision for you, let’s connect to explore your options.

How To Prep Your House for Sale This Fall

by | Oct 3, 2022 | FSBO, Sellers, Selling Myths, Selling Your Home

How To Prep Your House for Sale This Fall | MyKCM

Today’s housing market is different than it was just a few months ago. And if you’re thinking about selling your house, that may leave you wondering what you need to do differently as a result. The answer is simple. Taking the time upfront to prep your house appropriately and create a solid plan can help bring in the greatest return on your investment.

Here are a few simple tips to make sure you maximize the sale of your house this fall.

1. Price It Right

One of the first things buyers will notice is the price of your house. That’s because the price sends a message to home shoppers. Pricing your house too high to begin with could put you at a disadvantage by discouraging buyers from making an offer. On the flip side, pricing your house too low may make buyers worry there’s some underlying issue or something wrong with the home.

Your goal in pricing your house is to gain the attention of prospective buyers and get them to make an offer. And with price growth and buyer demand moderating, as well as a greater supply of homes available for sale, pricing your home appropriately for where the market is today has become more important than ever before.

But how do you know that perfect number? Pricing your house isn’t a guessing game. It takes skill and expertise. Work with a trusted real estate advisor to determine the current market value for your home.

2. Keep It Clean

It may sound simple but keeping your house clean is another key to making sure it gets the attention it deserves. As realtor.com says in the Home Selling Checklist:

“When selling your home, it’s important to keep everything tidy for buyers, and you never know when a buyer is going to want to schedule a last-minute tour.”

Before each buyer visits, assess your space and determine what needs your attention. Wash the dishes, make the beds, and put away any clutter. Doing these simple things can reduce potential distractions for buyers.

For more tips, check out this checklist for preparing your house for sale. Ultimately an agent is your best resource for tailored advice, but this list can help get you started.

3. Help Buyers Feel at Home

Finally, it’s important for buyers to see all the possible ways they can make your house their next home. An easy first step to create this blank canvas is removing personal items, like pictures, awards, and sentimental belongings. It’s also a good idea to remove any excess furniture to help the rooms feel bigger and make sure there’s ample space for touring buyers to stand and look at the layout.

If you’re unsure what should be packed away and what can stay, consult your trusted real estate advisor. Spending the time on this step can pay off in the long run. As a recent article from the National Association of Realtors (NAR) explains:

“Staging is the art of preparing a home to appeal to the greatest number of potential buyers in your market. The right arrangements can move you into a higher price-point and help buyers fall in love the moment they walk through the door.”

Bottom Line

Selling a house requires prep work and expertise. If you’re looking to sell your house this season, let’s connect so you have advice on how to get it ready to list, how to help it stand out in today’s shifting market, and more.

How an Expert Can Help You Understand Inflation & Mortgage Rates

by | Sep 26, 2022 | Buyers, Housing Market Updates, Interest Rates, Sellers, Selling Your Home

How an Expert Can Help You Understand Inflation & Mortgage Rates | MyKCM

If you’re following today’s housing market, you know two of the top issues consumers face are inflation and mortgage rates. Let’s take a look at each one.

Inflation and the Housing Market

This year, inflation reached a high not seen in forty years. For the average consumer, you probably felt the pinch at the gas pump and in the grocery store. It may have even impacted your ability to save money to buy a home.

While the Federal Reserve is working hard to lower inflation, the August data shows the inflation rate was still higher than expected. This news impacted the stock market and fueled conversations about a recession. It also played a role in the Federal Reserve’s decision to raise the Federal Funds Rate last week. As Bankrate says:

“. . . the Fed has raised rates again, announcing yet another three-quarter-point hike on September 21 . . . The hikes are designed to cool an economy that has been on fire. . .”

While their actions don’t directly dictate what happens with mortgage rates, their decisions have contributed to the intentional cooldown in the housing market. A recent article from Fortune explains:

“As the Federal Reserve moved into inflation-fighting mode, financial markets quickly put upward pressure on mortgage rates. Those elevated mortgage rates . . . coupled with sky-high home prices, threw cold water onto the housing boom.”

The Impact on Rising Mortgage Rates

Over the past few months, mortgage rates have fluctuated in light of growing economic pressures. Most recently, the average 30-year fixed mortgage rate according to Freddie Mac ticked above 6% for the first time in well over a decade (see graph below):

How an Expert Can Help You Understand Inflation & Mortgage Rates | MyKCM

The mortgage rate increases this year are the big reason buyer demand has pulled back in recent months. Basically, as rates (and home prices) rose, so did the cost of buying a home. That pushed on affordability and priced some buyers out of the market, so home sales slowed and the inventory of homes for sale grew as a result.

Where Experts Say Rates and Inflation Will Go from Here

Moving forward, both of these factors will continue to impact the housing market. A recent article from CNET puts the relationship between inflation and mortgage rates in simple terms:

“As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.”

Sam Khater, Chief Economist at Freddie Mac, has this to say about where rates may go from here:

“Mortgage rates remained volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth. The high uncertainty surrounding inflation and other factors will likely cause rates to remain variable, . . .”

While there’s no way to say with certainty where mortgage rates will go from here, there is something you can do to stay informed, and that’s connect with a trusted real estate advisor. They keep their pulse on what’s happening today and help you understand what the experts are projecting. They can provide you with the best advice possible.

Bottom Line

Rising inflation and higher mortgage rates have had a clear impact on housing. For expert insights on the latest trends in the housing market and what they mean for you, let’s connect.