What does time cost, apparently a lot!
We have all seen those social media posts about buying now at a higher rate and lower price, then refinancing down the road. Date the Rate, Marry the Home. or It’s Your Forever Home Not Your Forever Loan! It’s very true. I want to point this out with some data.
Rates. We all are looking at inflation and job data and what the Federal Reserve is doing. SNAILS MOVE FASTER!
Good news Inflation has come down from June 2022 high of 9% to last reading of 3%. The Federal Reserve’s goal is 2% year over year. We are close!
Bad news We are creating jobs and there are more people working which pumps money into the economy. This is the lagging number that keeps the Federal Reserve increasing rates. Making mortgage rates volatile and we see them moving, up and down Violently.
Bottom line. Rates are Sticky (new favorite word) They want to rally, the bond and debt markets want to rally, however we are slow and sticky that we just can’t break out and get into the low 6% or high 5% range we touched a couple of times this year. This is a GOOD trend for buyers who are taking advantage of the market today. It is my opinion that once rates move down, more buyers on the sideline will begin to aggressively enter the extremely unhealthy Real Estate Market.
Housing. This is a trend that is moving against the consumer and that potential home buyer.
Here are the numbers.
Days on Market. We are moving back in the teens, National 18 days / Sarasota County 25 Days less than 76% of all home sales are active for less than a month
Asking price vs. Sales Price 39.7% of homes sold below asking price, that number has dropped 15.5% since last year. That means if you had purchased last year over half of the homes sold got a deal!
Migration Florida leads the nation in Migration, More people are relocating to Florida and Sarasota is ranked #6 in the country as cities they are relocation to (Tampa #3)
Total inventory NAR total active inventory sits at about 1.08 million at the end of June, well below a normal market of just over 4 million units.
Bottom Line
WHAT DOES IT ALL MEAN?
If we look at trends, Inventory is shrinking, days on the market is shrinking. Sales price is increasing and MOST IMPORTANT the number of buyers is growing. If you have heard of supply and demand, you know where this is going!
So now its time to apply the numbers
IF YOU PURCHASE A HOME LAST YEAR WITH 20% DOWN AT THE MEDIAN PRICE
$373,735 SALES PRICE
74,747 DOWN PAYMENT
$298,988 LOAN AMOUNT
LAST JUNE Fannie Mae rate 6.375
Mortgage payment $1,865
THE COST OF WAITING
$456,106 SALES PRICE EXTRA $82,371
91,221 DOWN PAYMENT EXTRA $16,474!!!!
$364,884 LOAN AMOUNT EXTRA $65,896 FINANCED
Fannie Mae rate 7.25%
Mortgage payment $2.040 EXTRA $175 A MONTH
Why wait? Yes, we are almost at the end of rate increases and yes rate will fall, probably Q1-Q2 2024. Demand will grow, home values will go up, availability and options will be reduced. Bidding wars and NO Contingencies will return. For the hope of getting a better rate? That, you can tell your clients in VERY EXPENSIVE!!
Please call me if you would like to discuss this in detail or if you would like me to do a presentation to you or your team. I am very passionate about this and I am going to have tee shirts made for those who waited that will read “I INFORMED YOU THUSLY!”
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