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Positive Signs from the Housing Market

by Joanne Hiller

The national housing market is continuing to stabilize. According to Freddie Mac's Multi-Indicator Market Index (MiMi), half of the markets across the country are showing positive gains. While the national MiMi value of 74.4 indicates a weak housing market overall, the index posted a 0.51 percent improvement from August to September. Year-over-year, the index is up 3.68 percent. Since the market's all-time low of 59.8 in September 2011, the market has rebounded 24.4 percent.

More Construction
The National Association of Home Builders/Wells Fargo Housing Market Index is on the upswing as builder confidence climbed four points on the index to 58. Builders are more confident in today's market because consumers are more confident. Low interest rates, reasonable home prices, and an improving job market make home buying not only an attractive option but a viable one. As a result, builders are seeing more committed buyers walking through their sales centers and signing contracts. The news is welcome after the slow start to 2014. For the past five months, the HMI has stayed north of the 50-point mark. Economists with the NAHB expect builder confidence to continue to climb in the new year.

How Low Can They Go?
At the beginning of December, mortgage rates dropped to the lowest levels of the year. The 30-year fixed-rate mortgage fell to 3.89 percent, the lowest rate posted since May 2013. At the same time last year, mortgage rates were 4.46 percent. Economists have long maintained that mortgage rates will increase, and they predict that rates will climb to five percent by the end of 2015.

Good News for Most
For the second straight month, existing-home sales rose in October. According to the National Association of Realtors, existing-home sales climbed 1.5 percent to a seasonally adjusted annual rate of 5.26 million. For the first time in a year, sales are above year-over-year levels. Most areas of the country experienced gains in sales. In the Northeast, existing-home sales rose 2.9 percent month-over-month and 4.4 percent year-over-year. Sales climbed 5.1 percent in October in the Midwest, a 2.5 percent increase over October 2013 sales. The gains continued in the South, where sales jumped 2.8 percent from a month earlier and 5.3 percent from a year earlier. Only the West posted a drop in existing-home sales. Month-over-month, sales declined 5.0 percent; when compared with October 2013, sales are down 3.4 percent. NAR economists believe existing-home sales will continue to improve. Low interest rates, stabilizing price growth, and an improving housing supply should convince buyers that now is the right time to purchase a new home.

Thinking of Buying a Vacation/Retirement Home? Why Wait?

by Joanne Hiller

The sales of vacation homes skyrocketed last year. A recent study also revealed that 25% of those surveyed said they’d likely buy a second home, such as a vacation or beach house, to use during retirement. For many Baby Boomers, the idea of finally purchasing that vacation home (that they may eventually use in retirement) makes more and more sense as the economy improves and the housing market recovers.

If your family is thinking about purchasing that second home, now may be the perfect time. Prices are still great. If you decide to lease the property until you’re ready to occupy it full time, the rental market in most areas is very strong. And you can still get a great mortgage interest rate.

But current mortgage rates won't last forever.

According to FreddieMac, the interest rate for a 30 year fixed rate mortgage at the beginning of April was 4.4%. However, FreddieMac predicts that mortgage rates will steadily climb over the next six quarters.

Let’s assume you want to purchase a home for $500,000 with a 20% down payment ($100,000). That would leave you with a $400,000 mortgage. What happens if you wait to buy this dream house?

Prices are projected to increase over the next year and a half. However, for this example, let’s assume prices remain the same. Your mortgage payment will still increase as mortgage rates climb to more historically normal levels.

This table shows how a principal and interest payment is impacted by a rise in interest rates:

Cost of Waiting $400K

Should I Buy a Home Now?

by Joanne Hiller

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall down the road, while others are convinced that home prices will go up.

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have fluctuated, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, a one point rise in interest rates could cost tens of thousands of dollars over the life of your mortgage!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates while they are still available.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.

Displaying blog entries 1-3 of 3

Contact Information

Joanne Hiller
Coldwell Banker Residential Real Estate
110 Island Way
Clearwater FL 33767
(727)460-5721
Fax: (727)446-2691