Interest Rates Matter!


Last year if you bought a home for $690,000 (the house on the bottom) with $150,000 downpayment, your monthly mortgage payment would be $3,600. Average sq. ft 1658. Average 4 beds & 2 baths. 
FAST FORWARD to today. That same downpayment and same monthly mortgage payment now buys you a $750,000 home (the home on the top) Average sq. ft. 2146 Average beds 4 & 3 baths. 
So in this scenario you can now buy 500 more sq. ft and an extra bath. 

Buyer’s don’t need a brick house to fall on their heads to understand the significance this makes in both short term ability to purchase and long term benefits of perhaps not needing to buy again for a long, long time. Perhaps, instead of purchasing the entry level home, a couple can purchase the home in which they want to raise their family for the next twenty years or so, eliminating the need for an additional move.

And for the entry level buyer this is huge. The buyer that may not have been able to get into the market last year may very likely be able to this year at these interest rates. (That possibility increases with first time buyer lending products)

But, this is not your low interest rates of past years. In previous times, as much as we wanted to use those low interest rates, the competition among buyers, and the low inventory kept the first time buyer shut out. Multiple offers drove up prices and some buyers found themselves giving up. At this time, however, we are flush in inventory so buyers have choice, not as much competition with other buyers. And because of the swelling inventory, not only are sellers having to compete in the marketplace with listing price, they must now negotiate with powerful buyers.

It’s a great time to buy!

So, what does this mean for sellers? As noted above, this is not the frenzied market that a year or two ago would have brought every home multiple offers that drove up the sales price for the seller. As good as those days sound, there was really only one type of seller that market benefited. The seller who benefited was the one who was cashing out, selling his/her last home to move to a retirement community or across country to a home a third the price of a California home.

This is the golden time for sellers who want to purchase their next home. That would be the dream home or the move-up home or empty nester who wants to stay in California. The reason obviously, is that seller is also a buyer. He/she has more inventory available, more negotiating power and fabulous interest rates. In addition, the seller probably has lots of equity because California house prices remain strong even in this market that is more equitable for buyers and sellers.

It’s all relative

From twenty years of observing and working within real estate market patterns, I know that these times that are great for both buyers and sellers come along every three years or so. That’s not to say we should take these moment for granted. California housing prices are constantly inching up, even when they’re not soaring up. Three years from now could see housing prices another 20% higher than today.

Now is a great time!

Interest rates matter. To buy while interest rates are on your side, call me today! 714 310 3591
**This example represents averages of homes sold recently in Fullerton, Yorba Linda, Placentia and Brea**