March Real Estate Update: Mortgage Rates
By M.C. Dwyer
One of the biggest changes in the housing market over the past month is rising mortgage rates. Even though home mortgage rates are set independently by each lender, the impact of the Federal Reserve’s announcement that they plan to to fight inflation by raising the rates they charge banks, caused a reaction in the bond market. Conditions in the bond market affect the rates lenders need to charge new borrowers to make money, because most lenders need to sell the home loans they’ve made to investors. So, the average 30 year fixed rate mortgage jumped from around 3.25% during the 4th quarter to just over 4%*, (depending on the borrower and property price).
Despite this, or perhaps because buyers fear rates will get worse, the rate of home sales accelerated during the first part of February. Another reason why there are more homes selling is due to a normal, seasonal increase in the number of homes available for sale. County-wide, buyers paid about 2.7% over asking price on average in January, and the first part of February. In January, nearly 60% of the home sales across the County were priced at over $1 million. In Scotts Valley, the ratio was 100%, while across the San Lorenzo Valley the ratio was 43%.
If you’re a homeowner thinking of selling your home, my suggestion is to increase the amount of time you think it will take to get your home ready to put on the market. In my experience, the process takes longer than any seller ever thought. We tend to get comfortable in our homes and sometimes put off some of the less appealing projects. A good REALTOR® will guide you about which changes will get you the best return on your investment.
On the other hand, if you’re thinking about buying a home, my advice is to get all of your ducks in order: get pre-approved for a loan before you go shopping. Make your list of must-haves and nice-to-haves. Once you start looking at homes, be prepared to decide and act quickly. I have seen buyers losing opportunities by not being fully prepared and thinking too long. While the average time a home is for sale until the contract is negotiated is about a month in the San Lorenzo Valley, about half of homes went into contract in 14 days or less, with several taking only two to five days. In Scotts Valley, the average is just over two weeks, while one home went under contract within 24 hours.
Our Rebuild
My husband’s engineer is finally working in earnest on his building plans; he is hoping they will be ready to submit in March. Meanwhile, the National Association of Home Builders estimates lumber prices have gone up about 130% since the beginning of the pandemic (about five months before the CZU fire). They calculate that just the increase in lumber costs adds about $16,000 to the cost of building an average home in the U.S.
“M.C.” (MaryCatherine) Dwyer, MBA, REALTOR®
CA DRE License 01468388
EXP Realty of California, Inc.
Serving San Lorenzo Valley and Scotts Valley since 2005
(831) 419-9759 E-mail: mcd@mcdwyer.com www.mcdwyer.com
Sources: MLSListings.com Commercial and Single Family Homes data, California Association of REALTORs, Reuters, CoreFact, REALTOR.com, Mercury News, Mortgage Bankers Association, National Association of Home Builders, through press deadline February 18th 2022.
The statements and opinions contained in this article are solely those of the individual author and do not necessarily reflect the positions or opinions of eXp Realty, LLC, or its subsidiaries or affiliates (the “Company”). The Company does not assume any responsibility for, nor does it warrant the accuracy, completeness, or quality of the information provided.
Photos by MC Dwyer
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