I am sure you’ve heard, mortgage interest rates are low. Like really low!
But what exactly do low interest rates mean for Houston area home buyers and sellers?
Well for starters there is no doubt that Covid-19 and the global economic meltdown caused by the pandemic has changed the day to day lives of the entire world in some form or fashion. Sadly, many local business have had to shut their doors for good as a result of government enforced lockdowns trying to slow the spread.
Typically when the economy slides into a steep recession many people sit tight, and hold off on making large purchases or investments due to the looming uncertainty of what’s to come.
A new real estate trend is developing…
This pandemic has showed us thats not always the case, at least with regards to the real estate market. Interest rates have hung at historically low levels for the last few years, minus a few bumps here and there. This created a hot market in many parts of the country. It is easy for first time home buyers to qualify and the interest rates have encouraged to them to take the leap into homeownership.
Then the unexpected happened!
Interest rates went even lower!! I have had clients lock in at a 2.75% rate for a 30 year fixed mortgage. Something that would be been absolutely unheard of 10 or 20 years ago when rates where sky high!
The difference in a 3% and a 5% interest rate might not seem like much at face value. The chart below will show you the drastic difference in purchasing power it gives to prospective buyers.
I sure am glad we are out of the 19080’s!!
Even the difference in the 2000’s era interest rates are pretty astronomical. When buyers are given this kind of opportunity, they jump on it. Especially first time home buyers and those who could otherwise not afford to take on a mortgage.
This has created for a sharp uptick in the amount of buyers but the home inventory has remained stable creating a strong position for sellers in most cases.
Bidding wars are now frequent, driving prices higher for sellers.
I expect competition to remain high throughout the 3rd quarter and level out for the 4th quarter while the presidential election unfolds.
What the interest rates will do remains uncertain, like most things these days. But rest assured, as long as the stay in the same ball park as today.
Buyer demand will remain high and sellers will hold a slight advantage.
As always, if you have any questions about Texas Real Estate.
Don’t hesitate to give us a call at 281-352-9972
