Today's discussion is the second in a series of market updates for our clients and friends. While we had originally planned to cover some other topics first, we are noticing some movement in the market that is going to move our discussion on INTEREST RATES to the front of the line!
Over the last few weeks, the 30 year fixed interest rate has risen from around 5.625% on May 20 to 6.25% on June 18, for no apparent reason. The money fund, which is the rate the banks charge each other to borrow money, is at 2%. The last time it was at 2%, about 3 years ago, the 30 year fixed rate was in the high 4's.
While we can anticipate an immediate period of low interest rates while our econimy recovers, the banks will eventually have to raise their rates down the road--remember the years of 8% or even 10% interest? We can expect to see those days again--possibly 5 years out.
What does this mean for current and future buyers?
LOAN AMT. INT. RATE MTHLY PYMT. (approx)
300K 5% $1,610
300K 6% $1,800
300K 7% $1,995
400K 5% $2,147
400K 6% $2,400
400K 7% $2,660
500K 5% $2,684
500K 6% $2,997
500K 7% $3,327
As you can see, the additional cost of higher rates is substantial, so a case can be made that NOW is the time to buy vs. waiting for prices to drop further. (which we do anticipate...a discussion of TAMPA HOME PRICES coming soon) Our mission to educate, advise, and serve our clients. The best, most professional real estate advice we can give will take into account your personal situation, your stage in life, the needs and lifestyle of your family, and how long you anticipate staying in your home. We also take into account the market conditions in the specific neighborhoods you are searching, and the quality and value of the home you are considering. As part of the service that we provide to our clients, we can help you evaluate your needs to come up with a strategy that helps you reach your goals. If you or anyone you know is thinking about buying in the next year or two, call us to help you determine whether the best strategy is to buy now or to wait.
BUT AREN'T HOME PRICES GOING TO DROP SOME MORE? SHOULDN'T WE WAIT TO BUY?
There is not a black and white answer to this question. If you were thinking of waiting to buy, you may want to reconsider your reasons for waiting. If you'd like to implement a strategy that makes sense for you, don't wait to call us. As time goes by, some of your options may be taken off the table. We may not see 5% interest rates again in our lifetime.
Please feel free to share this information with friends who follow the market. As always, we are just a phone call or e-mail away.
