Just five short months ago, 30-yr fixed mortgage rates were below 3%. Six weeks ago, they averaged under 4%. This past week, they are sitting at 5.20%.
Interest rates coupled with inflated housing prices have caused homeownership to recently become very expensive… especially for young buyers who have seen nothing but cheap money their whole lives. Some of us older folks can remember the 1981-82 recession- worst economic downturn in the United States since the Great Depression. Job losses were felt acutely in the goods-producing sector i.e., manufacturing, residential construction industry and auto manufacturers. The Fed responded by restraining growth in money and credit to counteract hyperinflation. The year 1981 actually made mortgage interest rate history at 16.63% (Freddie Mac). Unless you were paying cash, buying a home in the 80’s was seriously expensive.
Today? With inventory low and creeping interest rates, people feeling the effects of $6/gallon gasoline and looking for ways to reduce the commute are playing financial gymnastics. Backing out of a locked in sub 3% fixed rate mortgage requires serious consideration. Rollover your sale price to what?
To make matters more complicated, more than 45 million millennials will enter the housing market this year being of prime first-time home buying ages between 26 and 35 years old. Finding properties that are affordable will be a significant challenge for this group.
Looking for a new home? Don’t immediately discount the listing that needs a little TLC. Affordable properties usually mean need updating… and that is an area where it pays to do your homework. Consult businesses that are upfront and honest about supply chain issues and how your project will be affected both in time to finish and price for materials. Home renovation costs can vary significantly based on materials, their availability and good project management. And yes, AKB will provide you with the information you need to guide you through your options.