Does the market seem to be changing? The answer is yes. Why? You may ask.
Interest rates: 30 year loans have increased from 3.95% on Jan 4th to 4.72% on Sept 27, 2018. (Freddiemac). What does this change mean? Let's look at a 30 year loan on a $450,000 mortgage: Principal and interest at 3.95% is $2135 per month, at 4.72% it's $2339. Acceptable loan to debt ratios for home loans range from 28 to 33% of total income. Using the example above, the $204 a month increase in interest rate cost, equates to an additional $680 a month in income to qualify.
County Taxes: As prices go up, taxes follow. When you consider the tax increases for an area (and you should), it could easily add up to another $150 per month. This could easily add another $500 a month to income needs to qualify.
Supply and demand: We're coming out of a low inventory market, this is good news for buyers. Given the higher cost of money and the higher inventory, prices, although not necessarily dropping, are not rising as before. The smart buyer tries to match inventory with the cost of money trends to get the best deal.
There are many factors that go into the home buying and selling equation. We have over 40 years experience, dealing with every type of market condition. Give us a call if you have a question, we can help.
