If you are currently shopping for a home, it will come as no surprise to you that the current market is very hot, and you need to move very quickly to get your dream home. If you are about to start looking, buckle up-it’s going to be a wild ride. Take for instance my last listing at 592 Madison, Birmingham, Michigan. We had an all-cash offer for near list price on the first day of the listing, FROM THE FIRST SHOWING. I did not even get the sign in the ground. We had nine showings in that first 48 hours.
Could it get any crazier? Yes, absolutely! Interest rates in the last few days have started to drop down to record lows that we have not seen since January of 2018. The current 30-year fixed rate according to bankrate.com is 4%. Two weeks ago it was 4.25%. On a $400,000 loan, that is a monthly savings of $60 on your mortgage payment. If you kept the same payment as the higher interest rate, you could now pay $12,000 more for that same house. That is an overnight (relatively speaking) increase in the value of 3%.
So take an already hot market, and now we are close to overheating…with no real signs of abatement. There are headwinds here in Metro Detroit though, new rounds of layoffs at Ford Motor Co., coming off of fresh layoffs at GM. This will likely cool the automotive market with the tier suppliers also likely having layoffs. A trade war with China and new rounds of tariffs are likely not going to help. However, it’s these reasons why rates have dropped, sensing nationally the real estate market is cooling off, lowering rates helps spur demand and increase prices.
If you are shopping or soon-to-be shopping, make sure you have the best for your real estate and mortgage needs going into this market. Give us a call, we can definitely help!