Today's Real Estate Market is quite interesting. On one hand we are dealing with rising interest rates and a growing economy. On the other hand we see rising sales and prices. What does all of this mean to you, a potential seller or buyer?
Let's take a walk back in time. The average 30 year fixed rate mortgage 5 years ago (February 2008) was just under 6% at 5.92% with ½ point fee. The average 30 year fixed rate mortgage was nearly the same in August of 2004 (source Freddie Mac.com). Rates were almost exactly the same, yet 2004 was a boom year and 2008 was a bust year for real estate. Gain some perspective by comparing those rates to today's average at 3.53% with .6% fee (according to FreddieMac for the week ending 2/1/2013). The media would have us believe that we will all go down the drain if rates rise, but we won't. A growing economy will bring growing interest rates but we'll also have more money to pay for these rising costs. Rates have climbed in the past 3 months and are expected to remain on that track, but no one really knows what the future holds.
What I do know is this: the difference in Principal & Interest payment for a $275,000.00 mortgage at 6% interest versus 3.5% is $413.89 per month. That's quite a bit of dough. The time to buy is right now.
On the other hand, we have that sales data I mentioned. In 2010, 30% of homes that were listed on the market sold, as of December 2012 we saw 59.2% of homes listed sold. What that means for our local market, is rising home prices (we are seeing 4-6% regionally) and a turn towards a seller's market. Once we see that 60% of homes listed are sold, we would call it a seller's market. The inventory of homes on the market is lower than the demand, which means, buyers who must buy have fewer homes in which to choose.
Norfolk alone went up 21% in sales price from December 2011 to December 2012. That's impressive! So, interestingly enough, the time to sell your home is right now.
It's a strange market we live in. The doom and gloom the media portrays doesn't apply as much to Hampton Roads due to our transient community. Let's be thankful for a healthy real estate market for both buyers and sellers!