Whether you’re starting a family or looking for something that better suits your needs now that the kids are out of the house, now is the right time to invest in a new home. It is still a buyer’s market and interest rates and property values are in the perfect position for a buyer looking to invest the largest scale asset that most people will ever own.
Interest rates on a 30 year fixed rate mortgage in the Hampton Roads area are hovering around 4% for May and June. In addition, a 15 year fixed rate mortgage is hovering around 3.8%. Comparatively, the interest rates of the pre-recession year of 2007 averaged about 6.35% and jumped wildly, about 0.1%, per month.1
Now interest rates are rising again. This is good for new home buyers for two reasons. Firstly, getting in on a new home purchase now means low monthly payments that can potentially be even lower depending on how much one pays as a down payment. Secondly, and perhaps more importantly, although rising interest rates will probably never be back at the 2007 level,2 a slight rise in interest rates corresponds with an increasingly well-off economy, and consequentially means higher property values.
In that same vein, the value of houses sold has risen 8.3% since April of 2014. Part of this is due to a relatively lower number of homes for sale, therefore raising the mean home sale price, but this is also due to property values still leveling out after the recession bust. Since July 2012, property values have been increasing and aren’t expected to level off for a few more years4.
Sales of new homes are expected to increase as the economy improves further. There is currently a 4.8 month supply of new homes at the current sales pace down form a 5.1 month supply of April 20143. For the prospective new home owner, this foretells a corresponding rise in new home prices in the next 5 months.
It’s a new home buyers market, but won’t stay that way for long. Head on over to the main page of TitleQuest.net and experiment with our customizable mortgage calculator to see how much you could save. Feel free to contact us; your local TitleQuest title insurance agency with any questions. Remember, Yes, It Matters Where You Close ®.
- 1. www.hsh.com HSH's National Monthly Mortgage Statistics: 2007 Author: Unknown (Blog Post) Retrieved From: http://www.hsh.com/natmo2007.html
2. www.thisismoney.co.uk Interest rates will 'probably never' get near to 5% again, says Bank of England as it predicts economy to boom 3.4% this year Author: Matt West (News Article) Retrieved From: http://www.thisismoney.co.uk/money/news/article-2557443/Confidence-UK-exporters-hits-record-high-firms-say-help-needed-Bank-governor-tweaks-rate-policy.html
3. www.msn.com Sales of new homes off to strongest start in 7 years Author: Jeffry Bartash (Blog Post) Retrieved From: http://www.msn.com/en-us/money/realestate/sales-of-new-homes-off-to-strongest-start-in-7-years/ar-BBkfRYr
4. www.bloomberg.com Home Values Post First Year-Over-Year Increase Since 2007 Author: Prashant Gopal (News Article) Retrieved From: http://www.bloomberg.com/news/articles/2012-07-24/home-values-post-first-year-over-year-increase-since-2007