Two topics that have seen a lot of recent discussion are the low interest rates, their impact on the market and a discussion about the how to evaluate investment properties.
Interest rates remain low, at or below 3.75% for a traditional fixed-rate 30-year mortgage. Last year, predictions had rates rising. Although they did rise briefly, they came back down just as quickly. Those of us that are older remember the ‘normal’ interest rate as 11% or 12% with times with rates over 20%. Younger folks think below 4% is normal. Although that seems the case now, it is an unrealistic long-term outlook.
If you’re a first-time home buyer, consider acting sooner rather than later to take advantage of a low interest rate. If you’re a current homeowner and already have a mortgage, consider speaking to your mortgage broker about refinancing. Even those that bought last year might find refinancing making sense at the current rates. I can get you to a good lender if you don’t have one.
The low rate means money is inexpensive for buyers. They can now afford more house for their monthly mortgage payment. Low rates produce more active buyers that can afford more house with their money. Consider that if your contemplating selling! Give me a shout if you’d like to quantify the potential benefit of selling sooner vs. later.
The notoriously hot Spring Market is still very active. I suspect we will see many homes go under agreement over the next few weeks as we approach the 4th of July Holiday. High-priced homes will either go under agreement or see price reductions as sellers begin to feel the market slow.
Summer brings vacations, travel, beaches and barbecues. With that, the less serious buyers will dissipate as their time and interests go elsewhere. This leaves the serious buyers to scour the market with less urgency, searching for the home of their dreams. Expect fewer multiple offer situations.
Speaking of multiple offer situations, the overall US home sales market has seen a 4x reduction in multiple offers since this period last year according to some recent surveys. This suggests a shift from a pure seller’s market to a more traditional market.
Sellers expecting to sell their home after the first weekend of Open Houses for an above-asking price will be surprised that this is now a rarity. Of course, pricing strategy plays the largest role in how quickly a home will sell. It is quite possible that grandiose seller expectations have them seeing dollar signs and unrealistically overpricing homes. The predictable result is fewer and lower offers.
As we consider above the macro market, always consider the micro market. The most meaningful real estate data is found in your town, neighborhood and home. Each piece of real estate is different and has its own unique pros and cons. Each town, neighborhood and street its own character and qualities. All effect the desire of buyers to own your home and in turn, ultimately affect the value of your home.
Many of us have struggled with how to invest our money when interest rates are so low. It seems currently the only producing investment is in the risky stock market. Theoretic reasons for this are many and as I’m not an Economist or Financial Advisor, I’ll leave that to the experts! What I do know is I have many clients considering investment properties since statistics show that real estate remains a lucrative and relatively safe investment avenue for many investors.
Commonly, multi-family rental homes are considered as a first foray into real estate investing. It may seem a daunting task to evaluate this type of investment but rest assured, I have tools at my disposal that will help you quickly and accurately evaluate a multi-family home as an investment. If you considering or wondering if investing in rental real estate is right for you, don’t hesitate to give me a ring to discuss the evaluation process!
Here’s to a great 2019!
Cheers,
Barry
