Interest rates continue to climb is now the time to make a move?
This seems to be the number one topic in the news and with every person, we meet these days. Homeowners worry we are in another housing bubble, buyers are scared the mortgage rates will get so high it will price them out of buying a home, and sellers who need to move are worried they won’t find be able to buy a home that fits their needs.
We understand, that this has been a crazy market for us too! There is just so much information flying around it’s hard to make an informed decision. As you know, we are your “go-to resource” for all things real estate. We are here to help you with what we see every day in the Grand Rapids area housing market.
Is what I’m hearing in the news true?
One thing NOT to do is get yourself too hyper-focused on the news!
The news media is trying to get you to click on their story by grabbing your attention. They are over-dramatizing what is happening or talking about what is happening nationally, not right here in the Grand Rapids area. Remember they are in the business of ratings and the more dramatic things sound the more people watch/click! (We got you to click with our catchy title!) 😊
Here at A&J Realty Partners, we like to look at the numbers, because numbers don’t lie. We have been tracking what’s happening in regard to home sales and trends in Kent County every week. The truth is we are not currently seeing the numbers decline in our area as they have been saying on the news. Yes, banks are laying off people in their mortgage departments but that is because people are not refinancing as they had been during the pandemic.
Are we in a housing bubble and are home prices going to crash?
Home prices are not coming down, they are just not rising as fast as they were previously due to the pandemic. As a homeowner, your home is continuing to increase in value. Even Dave Ramsey came out and said this just a couple of weeks ago.
The price of homes has gone up since the pandemic hit in 2020 by about 32% in Kent County. You can see on the graph below the prices have steadily risen since January of 2020.
The pandemic caused a housing inventory issue across the nation and here in the Grand Rapids area. People were stuck at home and working remotely, they were given stimulus money and the mortgage rates dropped ridiculously low. All those things together made people want to go out and buy a home that fit their needs. So, we ended up with more buyers than there were houses. The simple dynamic of supply and demand caused prices to increase and bidding wars. You can read more about this from ITR Economics by clicking on their name.
Inventory remains low, at the time of this article we are at .6 months of inventory. That means if the 748 houses we have for sale currently are sold and we had no new homes enter the market, we would be out of houses in 3 weeks.
We are not in a bubble that will burst and your equity in your home is not going to decline. We are seeing the mortgage rates start to go up which will slow the demand and in turn slow the price increase of homes.
Should I buy now or wait for the rates to come down?
The reality is that Freddie Mac — the main industry source for mortgage rates — has been keeping records since 1971 and the average rate for a 30yr fixed mortgage is about 8%. Rates are still low historically! The 2-3% rates we had during the past couple of years were an anomaly and not sustainable. They are what caused this crazy housing market we have been living in!
Did you know that Interest rates are not mortgage rates? When the interest rate goes up that doesn’t mean mortgage rates go up the same amount. The mortgage industry sets their rates based on interest rates but sometimes they set the rate knowing the interest rate is going up, so they don’t change when interest rates do. We saw this in June when the fed raised rates, but mortgage rates had been raised prior to adjusting for that increase, mortgage rates fell a little bit after that interest rate increase.
We just heard someone this week in an interview on the news say that renting is a better idea than buying right now. Unfortunately, renting during an inflationary market is not ideal. The reason why is because as prices continue to rise so do rent prices!
According to rentcafe.com the average rent for an 873-square-foot apartment in Grand Rapids is $1,371.00. And 51% of renters are paying anywhere from $1,001 – $1,500 in rent per month and 24% are paying $1,501.00 – $2,000.00 per month.
Renters account for 45% of the occupied housing units in Grand Rapids with 55% being owner-occupied. (That’s a lot of people who could be buying!)
Even at today’s 30-year mortgage interest rate you could still pay less per month, or close to the same and have more space, a yard for your pet, and be building equity for your future. It is a wise investment to buy your own home instead of lining your landlord’s pockets each month.
Remember as a buyer you should buy when you’re financially ready not based on the rates!
I want to sell but how do I buy a home in this crazy market?
If you have been living in a home now for months waiting for this crazy market to change so you can get into a home that fits your needs…now is that time. As you can see things are not going to change that much as far as buying and selling because of supply and demand.
And many times you can buy before you sell your home!!! Because home prices have increased so much in the past few years, your equity has grown, even if you just bought a few years ago. You can use that equity to purchase your next home before you sell your current home. Ask us how! firstname.lastname@example.org
Now you can go out and find that house with peace of mind, whether it is a smaller ranch home with less maintenance or a larger home with acreage and a pole barn. There is no rush to buy a home before you have to move out of your house. You can shop around until you find what fits your life goals and dreams with no pressure. Then sell your home once you have found the home that fits your needs!
And know, if you buy when rates are higher, you’re NOT stuck with that rate forever. Once the rates come down again you can always refinance.
We're April and Jean and we love helping people get into a home that fits their lifestyle. We call it "Right-Sizing", whether that is moving up to a bigger home or downsizing into something smaller. Let us know how we can help you make your real estate dreams come true.
2905 Wilson Avenue SW
Grandville, MI 49418
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