Interest rates are higher than this same time last year and most economists believe they will see interest rates rise two or three more times over the course of this year.
As interest rates rise, purchasing power—the amount someone is able to purchase—decreases. When the interest rate increases, the total mortgage payment also increases and that may negatively affect what people can afford in their budget.
Stock market. There seems to be a never-ending adjustment of the stock market lately as it reacts to the latest news politically or financially. These adjustments tend to make the typical American more than a little leery about making big purchases and home ownership is certainly a big purchase.
Lack of real estate inventory. Currently, the local market is at the second lowest level in eight years of homes available for sale in the Conejo Valley. The market is not expected to change any time soon.
If a home is remodeled or in a prime location and priced properly, Realtors are seeing multiple offers as buyers will vie to get great homes.
Affordability. Typically the lack of inventory pushes home prices upward—multiple offers are being made with the highest price usually winning—and that causes an affordability issue as buyers may get pushed out of their original price point.
The moderate rate increase does not necessarily spell doom for those looking to buy a home. In fact, this may give buyers the push they need to get out there and purchase the home they want now before interest rates rise again, getting the most for their money.
Getting a mortgage on the lower end of interest rates is always a better idea than waiting and paying more.
On the selling side, as interest rates rise, the pool of buyers may become less. So for homeowners considering a sale in 2018, the key to get the most potential buyers may be to list the home sooner rather than later.
If rates rise by one percent over the course of this year, a typical Conejo Valley homebuyer looking at an $800,000 home would need to look at homes that cost about $80,000 less, That $80,000 may be the difference between an extra bedroom they need or a certain ZIP code with better schools, or an older home versus a newer home.
For more information, call Lydia Gable with Lydia Gable Realty Group at Compass, Westlake Village, at (818) 383-4335.