The Dow Jones Industrial Average is just under 25,000. Deputy chief economist Len Kiefer announced a positive economic outlook saying â€śTreasury yields are higher and the economy has strengthened since Decemberâ€ť. As a result, and as I projected in my fall blog, interest rates on a 30 fixed mortgage have gone up; and theyâ€™ve gone up 48 basis points since January. When this happens, historically the real estate market slows, however not this time. Coming off of a strong 2017, there still wasnâ€™t enough inventory to meet the demand of the buyer community. â€śWe think the strength of the economy and pent up housing demand should allow the U.S. housing market to post modest growth this year even with higher mortgage ratesâ€ť Kiefer goes on to say. Along with interest rates and buyer demand, home prices have also been going up, showing an increase of 7.1% over the last year. That means your $350,000 home will now sell for roughly $375,000.
For so many people, the equity they have in their home is a big part of their net worth. I always tell my clients, I donâ€™t determine the price of your home nor does the consumer, the market dictates the price of a home. So we are in a unique moment in time where while rates have increased, so too have the number of qualified buyers and the value of your home; yet inventory remains low. Right now, you have an opportunity to perhaps be one of just a few, perhaps even the only home for sale on your street or in your neighborhood! What does this all spell out? Well, if youâ€™re a home owner that is looking to downsize, now may be a very good time to list. If you are a homeowner and are looking to go bigger, you may also consider listing because rates are still very low, but are climbing. I recently had a client say, â€śif I list now, I may get more money from the sale of my home, but Iâ€™m also going to pay more for my next home!â€ť My response was simple: â€śuse a mortgage calculator and plug in 4.5%, 5%, 6% and 7% because in doing so you will see the impact mortgage rates will have on your decision making. All Iâ€™m saying is that if, in the back of your mind you have considered selling, you should have a market analysis done on your home, be presented with the facts and make an educated decision. Iâ€™ve seen the cycle of real estate for many years; too many people wait too long, in hopes to max out their equity, which is extremely difficult to project.