Where Do Interest Rates Need To Be?
Many potential buyers are holding off from buying a home because they believe that mortgage interest rates are too high.
This, naturally, raises the question of where do interest rates need to be for these buyers to make a purchase.
For the first few months of 2023, interest rates have been fluctuating between 7.0% and 8.0%.
The average interest rate from the 1970s through today is about 7.76%, which a bit higher than today's interest rate.
The historically low rate of 2.96% was the average in 2021. Don't hold your breath waiting for that low rate to return anytime soon.
In 1981, when people were actually buying homes, the average interest rate was 16.63%. It is not likely that we are going to go anywhere near that amount. The economy in the late 70s and early 80s was much worse than it is today.
A recent survey done by John Burns Research and Consulting, LLC indicates that 5.5% is the magic number. Their study further states that builders who are buying the rate down to 5.5% are having success moving houses.
Making a decision based on one number does not consider the entire picture. Other numbers to consider are the price of homes, cost of property taxes, cost of insurance, tax savings that come from purchasing, the cost of alternatives to buying such as renting, the cost of goods, your income, your credit, your current debt, your current assets, and such.
If you actually want to buy, then you shoud give me a call so that together with a lender we can discuss your options and see just how much it will cost you.
Ron Trzcinski
Sachs Realty
410-935-5844
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