Well, we have good news to report on the market – We have reached a point of stability.
We are now officially into the winter market as we are starting to see things wind down. Our listing inventory is currently at 8,512 houses for sale which is actually down from our 7 year high last month. We have a 3.7 month supply of homes which is about the same level as last month. Obviously, we would like to see more sales as would our sellers but we are maintaining our sales levels, not decreasing which is more good news. Additional positive news is interest rates remain low and prices are stable so the opportunity for buyers to lock in reasonable monthly payments is available. From the buyer’s perspective, now is a great time to buy.
I had a conversation with Josh Burruss of MVB Mortgage about payments with rates where they are today versus a situation where they to go up .5% – here is the result of our discussion. Currently the rate on a 30 year fixed conforming mortgage is approximately 4.00% (APR 4.058%) based on a sales price of $500,000 with a down payment of 20%. If the interest rate were to rise just 0.5% (4.50% – APR of 4.562%) from current levels, the principal and interest payments would increase by approximately $117/mo. The difference in the overall finance charge in these two interest rates over the life of the loan is approximately $42,241.94. As you can see, just a half percent in interest rate can mean a huge difference in overall cost over the life of a mortgage. If you want to discuss this with him in greater detail, feel free to call him at 703-727-4239.
Moving forward, we need to pay attention to the end of QE3 and the government’s subsequent completion of bond buying. We are expecting rates to rise into 2015 as a result of this policy. Right now we have great rates so take advantage while you can because the Fed still thinks it will be a “considerable time” before it begins to raise interest rates. The Zero Interest Rate Policy remains in full force, as it has been since it began at the end of 2008. This policy will change because we cannot sustain this type of monetary policy as it just continues to add to our National debt. Plus, we need a market-driven interest rate environment and a more predictable monetary policy to help foster long term economic growth. This will definitely impact our housing recovery moving forward.
We would welcome the opportunity to discuss your housing situation in more detail so please feel free to contact me via email email@example.com or give me a call 703-652-5777