Home Advice for Homebuyers
As a thought leader in the mortgage industry, I was recently asked to comment on what the increase in mortgage rates means for homebuyers right now. A reporter from Fox 5 came to the Southeast Mortgage offices to interview me on the topic and the segment appeared on “Good Day Atlanta,” in a report by I-Team reporter Dana Fowle.
One of the questions she asked me was what advice I would give to people who are considering purchasing a home. The short answer is if you’re in the market, it’s time to take buying a new home seriously.
I mentioned that as of early June, rates had risen from 3.25 percent to almost 4 percent. As of the end of the first week in July, 30-year fixed rates had risen over 4.5%. As I always advise buyers – look at the combination of sales price, interest rates and your down payment. If it makes sense for you, then go ahead and purchase a home.
Interest rates are always going to move up and down. As I’ve written in a previous column, we have been enjoying historically low rates. Anyone familiar with the housing market knows an increase in rates is not unexpected. They were bound to rise at some point. We have most likely seen the bottom; although we do not predict the market and they may still fluctuate somewhat. Changes in interest rates are usually gradual, but with the Federal Reserve signaling that they will begin tapering their quantitative easing as early as September, interest rates have risen dramatically over the last two months.
Home prices are on the rise as well. In the first quarter of 2013 the increase in home prices led many homebuyers into the market. According to the S&P/Case-Shiller Home Price Index, the increase of home prices in Atlanta from 2012 Q1 to 2013 Q3 was one of the highest in the country, at 19.1 percent, compared to 10.2 percent nationally.
The inventory of homes in Atlanta is still low, further contributing to the rising price of homes. Fifteen years ago, when the population of Atlanta was about 1.3 million less, housing inventory was more than double where it is today, according to Eugene James, Regional Director for Metrostudy, a national housing intelligence and consulting firm. Metrostudy’s database shows that finished housing inventory (homes 100 percent completely built and ready to be moved into) continued to decline by another 30 percent below levels in 2012. Recently only around 2,431 houses were in the finished inventory category and are spread out over 22 different counties.
To expand on the advice I gave during the “Good Morning Atlanta” segment, while rates are important, when it’s time to buy a home, you should also look at the sales price and your down payment. It you are confident in your own job security and are ready for the move into a home of your own, then now is a good time to consider making a purchase.
Click here to see the TV segment and read the accompanying article.