By Heidi Dugan
With interest rates rising would you recommend buying now or waiting until the spring to see
if rates will come back down?
Thank you for the great question! I am being asked this almost daily by both buyers and sellers. Mortgage rates have doubled this year from 3 percent to the 6 percent range, and our lenders are telling us they do not see rates moving lower over the next six to nine months. So, what is a seller or buyer to do?
First, it is important that you hire an experienced, seasoned professional Realtor® who will be knowledgeable about local lenders who can help you find the best way to finance your new home purchase. While we are still seeing multiple offers on some properties, these buyers all have different abilities to close. If you are a seller, your agent will vet out the buyers and be sure they are qualified. If you are a buyer, you will want to put yourself in the best possible bargaining position, which means you have all your financing figured out before you find the right house and are ready to pull the trigger and look serious and well qualified. A seller will not look at your offer if you do not have proof of funds or a pre-approval letter. To get this type of letter, a buyer needs to complete a loan application and provide the lender with supporting documentation of assets, debts and income.
We continue to see buyers in all price ranges out with Realtors looking for their dream home. Attached are two statistical reports for the Bellaire and West U areas. Housing inventory for both areas is holding at 2.5 months, which is maintaining what Realtors call a “Seller’s Market.” While sales have decreased 17 percent in Bellaire and 33 percent in West U, the average sales price has increased 6 percent and 14 percent respectively in those neighborhoods.
This tells me that waiting for interest rates to come down could be a self-defeating strategy as you attempt to wait for rates to drop while the availability of the type of house you are looking for also diminishes. In other words, don’t wait if the right house comes along. Also don’t forget that if rates do go down in the future, you can always refinance. So don’t lose the house of your dreams over this. The changing interest rates have had little effect on the higher end market because historically interest rates are still relatively low. I remember selling homes with much higher rates than we currently have.
Someone recently shared some words of wisdom with me: “You marry the house and date the mortgage.” The rules of financing a home have changed over the years, with most Texas homeowners staying in their current mortgage for 5-7 years. I encourage clients to talk to their lender about adjustable-rate mortgages and ARMS which are still in the mid-4 percent range, depending on your fixed rate period. Again, once rates move lower, whether it’s next year or down the road, you can refinance then and lower your monthly payment. It’s a win-win!
Another contributing factor to support a strong real estate market is the volatility in the stock market. Investors, as well as individuals, are seeing more than ever that real estate is the perfect place to have your investment. Homeowners are seeing that the appreciation on their homes is much better than any gains they are currently getting in the stock market. It seems investors are in agreement — so there is still lots of buying activity out there.
A professional real estate agent has essential insights you’ll want to rely on throughout the transaction.
If you have any real estate questions or needs, please feel free to email firstname.lastname@example.org and I will answer it in my next column.
Heidi Dugan has been recognized by the Houston Business Journal as one of the city’s Top 25 Realtors every year for more than 15 years, and in West University Place, where she has resided for nearly 40 years and raised her children, she is consistently ranked the No. 1 real estate agent, according to MLS
statistics. She is proudly affiliated with local and independently owned Greenwood King Properties.