How Low Can You Go???
Over the past week we saw home sales hit the second highest level of the year (data released about Nov.), we hit a4 year low in the quantity of new listings on the market, and we burst right through our previous record low interest rates! Is this the salvation that we have been waiting for, or a sign of the rapture coming to claim us!
While this may sound overly dramatic, these are some pretty significant markers in the housing world. Just when we thought we had seen the lowest rates possible, eight weeks at or below 4% interest rate on a 30 year mortgage, we find ourselves almost a full percentage point below where we were at the start of 2011. Consider this: If you waited until today to take out a $200k mortgage, you would be saving roughly $100.00 per month over if you “lock’d and doc’d” at the beginning of the year!
To be more specific we hit 3.91% on a 30 year fixed rate mortgage, and this same time last year we were at 4.81% on this same product! It only gets better: on a 15 year fixed rate we hit 3.21% vs. 4.15% a year ago, and on a 5-year treasury indexed hybrid ARM we hit 2.85% vs. 3.75%.
Whether this is the salvation of our housing market, or the rapture of what remains, is something that we unfortunately will have to determine in hindsight (I’d say about three to five years from now); as there are just far too many variables involved in this experiment to make an accurate prediction of the effects these changes will have. Moreover, real estate value has always been a localized phenomena, and anyone who disagrees needs to read Examined: Santa Monica and then compare it to Examined: La Crescenta.
Obviously these rates are under the perfect circumstances, and all will have point payments required to obtain them, but if you are planning to buy in the next three to five years, you should try to capitalize on what we are seeing here. Just be sure to check out our “Examined” section to determine what areas are safer bets than others. As this section is relatively new on our Gazette, if you don’t see the city you are interested in leave a comment below and we will investigate it for you!
Let us know your thoughts below, and have a great day!
-JJM
John is the Vice President here at JohnHart, and as such is responsible for managing and directing the firm towards obtaining its ultimate goals.
He is also one of our main contributors on the Blog. (please see his profile page on the main site for more information.)
