Fear NOT the Increasing Mortgage Rates!

We all want the BEST deal in real estate. To a seller, that means the highest price possible...to the buyer, that means the lowest price possible for a house nothing short of the highest quality they expect in a home. We can certainly relate, that when it comes to finding a place to raise our kids or go to relax after a long day at work we want nothing but the best. As a Realtor, I have committed to helping people find the best deal at all stages of their lives. It's all a matter of taking a leap at the right time.

2016: For our local and regional real estate market, it has been by far the most tell-tale year of market improvement and health in nearly 10 years. The biggest issues for sellers this year was dealing with immediate sales, multiple offers, and overcoming possible short-appraisals (when sales price is not supported by comparable sales from the recent past). Appraisers can use SOLD data up to a year in arrears. Typically, however, they only go back 6 months to compare values to the house just sold. In most cases the sales prices were in fact LOWER than the property just sold. Because so many buyers were bidding on the same property within hours of being listed, the bids were often full list price and higher. The good news is that after several appraisal bumps-in-the-road, the appraisers (on behalf of the lenders) were able to catch up to the greatly improved market pricing by realizing higher sales prices and by allowing for "increasing" values in the market place.

Why so many multiple offers? The answer is threefold:

1) Amazing properties for sale. Today's sellers are ultra-competitive, and with great guidance, often put out the type of home buyers want. 2) More buyers than sellers. This should, as learned in Economics 101, return higher pricing as demand outpaces supply. 3) Low interest rates. For years, the rates have been looming between 3.5 - 5%. Since 2013, as the economy showed signs of improvement, capable buyers ventured out to purchase. Sellers, who for years wanted or needed to sell, added their homes to the inventory. By 2015, the economy showed real signs of health and even more capable buyers came into the picture, fully enjoying the lowest mortgage interest rates ever presented in history. But it was 2016 that seemed to change everything! Sales prices increased as buyers flocked to the market to lock in rates.

So what will 2017 bring?....I believe renewed confidence in the real estate market place! At least it should. Interest rates increase because the economy is improving. That is a very good thing, and although no one wants to make higher mortgage payments than say their friend who was able to lock in at 3.75%, waiting could mean an even more dramatic alternative of even higher rates than today, and certainly higher sales prices. Also, due to an increasingly strong market throughout 2016, sellers should continue to reap the benefits of multiple offers and immediate sales, but this time with less appraisal issues. Additionally, our local markets do not resemble growth as seen in the sun-belt states of the US, which makes for very desirable pricing at any time. Furthermore, lenders have improved their game in a way that ensures "better" buyers, by requiring stronger credentials before issuing a pre-approval letter stating that the buyer is capable of purchasing.

Finally, as smart buyers and sellers absorb the reality of increasing mortgage rates, their confidence in entering the market will renew knowing fully that, as the calendar turns to 2017 the market has in fact improved. After all, if the best deal for sellers is the highest price, and the best deal for buyers is that the home meets their high standards at the lowest price, then I believe the real estate market conditions are shaping up to make 2017 the best yet for both. So, if you're on the fence about entering the market, ask yourself, really, what are you waiting for?