As I sit here and edit the little addendum I can hardly believe how our prices in Denver have increased and interest rates have too! And then there is a couple I am working with to try and find a home who have been here for 6 months “waiting” and they have found that very thing…prices in the 300 to 400k range have increased by about 7% and interest rates have gone up too, making it harder to afford a home they “could learn to love”. It is a hard lesson when the right house disappears from under you because someone acted faster than you and that is a regular part of the orientation into the Denver market I do for buyers. And sellers start to wonder when their home is not sold in 5 days! What a crazy market here in Denver!
An economist responded when asked how interest rates would change: “They may fall some and then, rise and after that, they’ll fluctuate.”
Just because interest rates have been low for ten years doesn’t mean they are supposed to be low. The Federal Reserve has raised interest rates twice this year and are expected to go up twice more plus three times next year. Mortgage rates have risen from 3.95% to 4.62% since the first of January.
Increased rates directly affect the payments on homes but so does the price. With inventory levels remaining low, the prices will continue to go up. When interest rates and prices rise at the same time, it costs buyers a lot more.
If the mortgage rates go up by one percent and prices increase by five percent in the next year, the payment on a $250,000 home could go up by $200 a month. In a seven-year period, the buyer would pay $18,000 more for the home.
People planning to buy a home, need to investigate the possibilities of accelerating their timetable to take advantage of lower rates and prices. Use the Cost of Waiting to Buy calculator to see how much more it could cost you to wait. Call (303) 880-5585 if you have questions about what can be done now. Or contact me.