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The Time is NOW For Serious Home Buyers!
- 2018 home prices AND interest rates have increased 5.4% and 15% respectively! It’s time to buy as close to year end as possible!
- Just look at what happened to both home prices and interest rates in 2018. Median home prices rose 5.4 percent, according to CoreLogic, and interest rates increased about 15 percent‚ which is nearly a full percentage point year over year. Heading into the new year, CoreLogic predicts home prices to increase by another 4.8 percent, and Lawrence Yun, chief economist for the National Association of REALTORS®, predicts a 4.7 percent rise. The Mortgage Bankers Association, meanwhile, anticipates another 11 percent rate jump in in 2019 due to signals from the Federal Reserve.
- Here is an estimate of what these moderate increases may look like to home buyers:
- 2018
- Home price = $216,700
- Monthly principal and interest payment at 4.81 percent (excluding a down payment, taxes, and insurance) on said home = $1,138/month
- 2019
- Home price = $226,884 (a 4.7 percent increase from 2018)
- Monthly principal and interest payment at 5.33 percent (excluding a down payment, taxes, and insurance) on said home = $1,264/month
- IHS Markit, a financial services firm and prognosticator for global governments and businesses, forecasts that average wages will increase 2.5 percent in 2019.
- Home prices and interest rate increases will continue to outpace the wages potential buyers will earn. The longer one waits to buy, the more one will pay for the home.
- The good news for buyers is that median home prices and monthly principal and interest payments are not as high as they were during the market peak in 2006, prior to the housing crash and financial crisis. That year, the median home price was $248,980 with a 6.7 percent monthly mortgage rate, which equated to a payment of $1,283.
