Have You Noticed Our Market Shift?
Our market is shifting at a rapid pace; here’s what that means for you.
Our market is changing at a rapid pace. It’s happening so fast that you may not have even noticed it, so today we want to compare our current market landscape with 2021.
In 2021, the average home purchase in our area was around $400,000. Interest rates were still low, and if you had good credit, you could easily lock in a 3% rate. For a standard 30-year mortgage, your total payment would be $2,110.43 per month after taxes, insurance, and average HOA fees. If you put 20% down and didn’t need insurance, your payment would be even lower.
"As rates rise, your monthly payment increases."
If you bought this same house in 2022, it would likely cost $500,000. On top of that, the Federal Reserve has been raising interest rates all year. Now, your rates will probably be closer to 5%. If you received the same type of loan with a 5% rate, your monthly payment would now be $3,058.24. That’s an increase of $947.81 or 69%.
As you can see, affordability is decreasing, and it’s happening fast. Just in February, we closed on a home with a 3.75% interest rate. The difference in your monthly payment from just a 1.25% rate increase is huge. The Fed has said they’re planning to increase rates even further as we head deeper into 2022.
Recently, we’ve received an influx of buyers from Seattle, California, and other parts of the country with more expensive markets. These buyers have plenty of cash from their home sales, so they can afford the price and rate hikes. However, if you’re a local buyer, you may need to move fast to compete in this market.
If you have questions about today’s topic or anything else, please call or email us. We are always willing to help!