Mortgage Rates and Real Estate Cycles
By M.C. Dwyer
By late August, mortgage interest rates were at their highest levels since the early 2000s. The latest bump upward in rates unfortunately disqualified more would-be first-time home buyers. Overnight, we went from expecting multiple offers on one of our more affordable listings, to being happy to get one offer to our seller at list price. Now more buyers will likely have to look at properties that have been on the market for a while, in hopes of finding sellers willing to grant credits to help buy down the mortgage rate.
Even though fewer buyers can qualify at these higher rates, at the same time, fewer sellers want to sell. The majority of homeowners have a mortgage rate under 5% — many between 3-4%! — and they just don’t want to pay a 7% mortgage on another house. They’d rather stay put. So far, the supply/demand ratio is holding steady, so most experts don’t see the ingredients for prices to fall more than they already have from the peak of around June 2022. Some say that whenever rates do fall, there is likely to be a resurgence of buyers and pent up demand, causing prices to run up again.
This brings up a perennial question: When is the right time to buy a first home? Buying a home is so much more than an investment — it provides shelter and stops the need to pay rent which is essentially paying down someone else’s mortgage. So many personal factors are involved in the decision! The ideal time horizon to own a home is often said to be 7 years or longer. Real estate cycles last anywhere between several years to over a decade. But it’s rare for first-time buyers to succeed when they’re “timing” the market. “Timers” inevitably wait too long and eventually, sadly, many get priced out of the market. Better to buy when it makes sense for your lifestyle and financial situation. The difference between the average homeowner’s and renter’s ability to direct their financial future is shocking: the average homeowner’s net worth is 40 times higher than the average renter’s.
Our Rebuild
Even though it’s been three years since the August 2020 CZU Lightning Complex fires, just 1 more home finished being rebuilt since last month, for a total of 36. Over 900+ homes were lost to the fires: 175 permits have either been issued or are ready, and 230 permits are in process, the same as last month.
Financing for my husband’s rebuild finally came through! After a total of 8 case managers had been assigned to “facilitate” the SBA loan process, “special exceptions” were finally given to us, to release the majority of the loan. Simultaneously, the mortgage holder who has been holding the insurance proceeds said the project had reached the required threshold to release more money. It is such a relief not to owe our contractor six figures anymore, and now building is back on track. My husband completed building all of the cabinetry and his sister flew out to help.
Send your questions & topic requests to “M.C.” (MaryCatherine) Dwyer, MBA, REALTOR®
(831) 419-9759 E-mail: mcd@mcdwyer.com Website: https://mcdwyer.exprealty.com
CA DRE License 01468388 EXP Realty of California, Inc.
Serving San Lorenzo Valley and Scotts Valley since 2005
Sources: Mercury News, California Association of Realtors, Realtor.com
https://www.santacruzcounty.us/FireRecovery.aspx
The statements and opinions contained in this article are solely those of the individual author and her sources, 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.
Featured photo: JUST SOLD – 15820 Old County Highway, Boulder Creek. We represented the sellers so they could move closer to their family and jobs. (Photo credit: f8 Real Estate Media)
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