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When Will Mortgage Rates Hit 5%?

The big question for homebuyers is when interest rates will begin to rise to the 5% mark. The effect of a rise in mortgage rates could be a dramatic increase in the monthly mortgage payment when purchasing a home. In an article last week, HousingWire quoted two different sources regarding this issue.

Most experts are projecting that rates will rise when the Fed decides to taper the purchase of bonds which has acted as a stimulus to the housing market by keeping long term mortgage rates at historic lows.

In the article, Sterne Agee’s managing director and chief economist Lindsey Piegza pointed out:

"Federal Reserve officials said they might reduce their monthly bond buying program from $85 billion 'in coming months' as the economy continues to improve."

The article also quotes Frank Nothaft, chief economist with Freddie Mac:

“By the end of 2014, rates will probably approach and perhaps touch 5%. A reason we see the uptick in rates is that I do think some point the Federal Reserve will start to taper and scale back its very active purchase on long-term Treasuries and mortgage-backed securities.”

Rates will hit 5% sometime in 2014. It might be better to buy sooner rather than later.

5 Reasons to Sell Before Spring

Many sellers feel that the spring is the best time to place their home on the market as buyer demand increases at that time of year. However, the fall and winter have their own advantages. Here are five reasons to sell now.

Only Serious Buyers Are Out

At this time of year, only those purchasers who are serious about buying a home will be in the marketplace. You and your family will not be bothered and inconvenienced by mere 'lookers'. The lookers are at the mall or online doing their holiday shopping.

There Is Far Less Competition

Housing supply always shrinks dramatically at this time of year. The choices for buyers will be limited. Don't wait until the spring when all the other potential sellers in your market will put their homes up for sale.

The Process Will Be Quicker

One of the biggest challenges of the 2013 housing market has been the length of time it takes from contract to closing. Banks have been inundated with both purchase and refinancing loan requests. Both of these will slow in the winter cutting timelines and the frustration these delays cause both buyers and sellers.

There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 25% from now to 2018. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with historically low interest rates right now. There is no guarantee rates will remain at these levels in years to come.

It's Time to Move On with Your Life

Look at the reason you decided to sell in the first place and decide whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

You already know the answers to the questions we just asked. You have the power to take back control of the situation by pricing your home to guarantee it sells. The time has come for you and your family to move on and start living the life you desire. That is what is truly important.

What Buyer's Want Most in a Home

The Cost of Waiting

How Long Will the Housing Stall Continue?

For the third month in a row, the median home price across Southern California has stayed flat at $382,000. There are multiple factors that are resulting in the current stall: higher mortgage rates, skyrocketing prices, an expanding supply of homes and investors pulling back after swarming the market. This cooling has suppressed the fear of another housing bubble and could signal a return to normality.

The California Association of Realtors predicts that year-over-year price increases will return to 6% next year which is more in line with historic norms. The run-up in prices peaked in June with an outstanding 28% year-over- year increase in the median price. This increase was a result of sellers getting multiple bids over asking price among a heavy demand and scarce supply.

Part of the slowdown is seasonal and another part is attributed to a more empowered class of buyers who won’t buy if they feel the house is not perfect. Buyers are also demanding more repairs from sellers, and getting them.

The housing recovery started in 2012 and shifted into overdrive this year as traditional buyers and investors rushed into the market trying to take advantage of rock-bottom interest rates and below average home prices. Buyers were convinced that the housing crash had finally bottomed out and began placing bids without even touring the homes. Families were forced to do battle with all-cash investors amid a historic shortage of homes.

Now prices and mortgage rates have risen to the point where many buyers have decided to check out. The current waning demand has caused some sellers to reduce their asking prices. As the number of September listings rose in Southern California, a total of 19,112 houses and condos were sold resulting in a 17.1% drop from August.

The slowing is not just a local but a national trend: 20 of the largest metro markets have seen a decline in home sales. Even homes in good locations with the right price are sitting on the market for longer than anticipated. Despite the slow months inventory remains tight and experts say the housing recovery continues to move forward, adding that home prices will rise slowly over the next year.