We are constantly hearing about and also being involved in conversations about Hockessin Real Estate and the state of the economy.
Hockessin real estate like real estate everywhere in the country has declined in value and adjusted to
the supply and demand. Buyer's incomes simply weren't keeping up with the drastic increase in values throughout most of the first decade of the century, so gradually prices started to decrease. We seem to
be at a point now where values are settling in and although that is a good feeling, we are not out of the woods yet. Our economy has got to get back on track and guess what is the main driving force?
You guessed it - Real Estate - Buyers and Sellers coming together in the marketplace.
As most people are aware, the government has jumped in to the mortgage business and is issuing tax incentives among other buyer perks. Uncle Sam has virtually become the mortgage business as it has forced interest rates to stay where they are right now which is around 5%. Although this is a good thing for spurring the economy, it can't last forever and they have announced that they are turning the mortgage market back over to the private sector at the end of March 2010. What does this mean? If it's not obvious already, interest rates WILL increase. Historically when interest rates do a spike they rise back up higher than the last spike as seen in the chart above. If rates go up by only 1%, prices will have to fall 10% to keep things on an even keel. Buyers are concerned with monthly cost (the mortgage payment) and you can be assured that if interest rates spike, prices will unfortunately have to find a lower floor. Supply will increase again at first as sales slow down and many sellers will be in denial, but will have to decide to stay put or lower their price. If selling and buying again right away, especially locally, it will be a wash as other prices will have declined. With all this said, there are many variables - get good professional advice!
Hockessin is a very popular area and values are higher than most areas in New Castle County, but prices still have to align with buyer's affordability and that has everything to do with mortgage interest rates. Hockessin real estate is and has been a great investment, but as with everything else, we're in an adjustment period and while we can be optimistic, we must be very cautious and realistic at the same time. If you're thinking of buying and/or selling, the time may or may not be right, but for straight facts and honest opinions call the Hockessin Real Estate Experts, Dave & Diane Iliff at Patterson Schwartz Real Estate in the heart of Hockessin, Delaware.
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