Will The Housing Market Flourish With Higher Rates?
August 22, 2013 by Johnny Brooks
Will the housing market continue to flourish with the increase in mortgage rates? That’s a question only time will tell. Up to this point, the market has held up well. Even as interest rates crept above 4 %, home buyers were still clamoring for a home. The limited inventory had a play in this buying frenzy. Home buyers have been more inclined to pursue a home before rates and prices move higher.
The era of exceptionally affordable housing is fading in many parts of California with the simultaneous uptick in mortgage rates and home prices. At the bottom of the housing downturn, most markets were more affordable than historical averages. But home prices have risen rapidly in most communities as the housing recovery has taken hold.
Prices in Davis were 10% higher in June than a year ago. Larger markets like Los Angeles and San Francisco were up 21% compared to 2012 numbers. The national average was up 12% in 2013. Low interest rates have been a big driver of affordability. Will these increases in rates slow the buying bonanza and flatten home prices?
Interest rates are currently standing at 4.59% for a 30 year fixed mortgage. This is up from last weeks rate of 4.52%. Home prices are up over 10% through the 15th of August, compared to the same time last year. Here’s a look at the last three years of sales activity for Davis.
# Sold Avg price Price per sq ft Avg size Days on market
2013- 337 $506,914 $283 1,812 sq ft 37
2012- 319 $445,018 $254 1,752 sq ft 71
2011- 250 $481,445 $264 1,833 sq ft 80
More homes sold through the first six months this year than in the two years prior. They also sold at a much quicker pace this year. Outside of the specific numbers, this would be a good comparison for the rest of California. Bottom Line
: With housing affordability close to historic high levels, we can expect ongoing increases in home sales this year, since buying a home at today’s prices, financed with today’s still low-interest rates, can be the “deal of a lifetime,” especially for first-time home buyers. Please visit my website www.JohnnyBrooksHomes.com
for helpful tips on buying or selling a home, scan my informative blogs, join my professional networks on LinkedIn and Twitter and easy access to view local area homes for sale in Davis, California and the surrounding communities.