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Julie Larson REALTOR®  941-284-9826

Mary Lou Hetman REALTOR®  941-320-1575

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Factors to Watch in Today’s Real Estate Market

Factors to Watch in Today’s Real Estate Market Whether Buying or Selling

2 Factors to Watch in Today’s Real Estate Market Whether Buying or Selling | MyKCM

When it comes to buying or selling a home there are many factors you should consider. Where you want to live, why you want to buy or sell, and who will help you along your journey are just some of those factors. When it comes to today’s real estate market, though, the top two factors to consider are what’s happening with interest rates & inventory.

Interest Rates

Mortgage interest rates have been on the rise and are now over three-quarters of a percentage point higher than they were at the beginning of the year. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates climbed to 4.72% for a 30-year fixed rate mortgage last week.

The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows the impact that rising interest rates would have if you planned to purchase a $400,000 home while keeping your principal and interest payments between $2,020-$2,050 a month.

2 Factors to Watch in Today’s Real Estate Market Whether Buying or Selling | MyKCM

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000). Experts predict that mortgage rates will be over 5% by this time next year.

Inventory

A ‘normal’ real estate market requires there to be a 6-month supply of homes for sale in order for prices to increase only with inflation. According to the National Association of Realtors (NAR), listing inventory is currently at a 4.3-month supply (still well below the 6-months needed), which has put upward pressure on home prices. Home prices have increased year-over-year for the last 78 straight months.

The inventory of homes for sale in the real estate market had been on a steady decline and experienced year-over-year drops for 36 straight months (from July 2015 to May 2018), but we are starting to see a shift in inventory over the last three months.

The chart below shows the change in housing supply over the last 12 months compared to the previous 12 months. As you can see, in June, July, and August, inventory levels have started to increase as compared to the same time last year.

2 Factors to Watch in Today’s Real Estate Market Whether Buying or Selling | MyKCM

This is a trend to watch as we move further into the fall and winter months. If we continue to see an increase in homes for sale, we could start moving further away from a seller’s market and closer to a normal market.

Bottom Line

If you are planning to enter the housing market, either as a buyer or a seller, let’s get together to discuss the changes in mortgage interest rates and inventory and what they could mean for you.

Call Julie Larson 941-882-0322 or send an email to discuss what these changes mean to you!

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Posted in: Real Estate

About Julie Larson, Realtor with White Sands Property Group FL

Julie loves the Sarasota's Suncoast area and gets a lot of joy out of matching up home buyers with home sellers and creating a win-win situation for all involved.

ThinkSuncoast.com is your one-stop real estate resource for Sarasota and the surrounding areas.

Your questions and comments are always welcome! Call or text 941-284-9826, email Julie@ThinkSuncoast.com or by using the form on our Contact page!

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« Should I Buy Now or Wait Until Next Year
Are We Heading Towards Another Housing Bubble »

Contact Julie Larson

 
 
 
 
 
 
 

Julie Larson, Realtor®
941-284-9826
Julie@ThinkSuncoast.com

Julie Anne Larson LLC

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White Sands Realty Group Florida
1990 Main Street Suite 750
Sarasota, Florida 34236
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