Are you feeling triggered by all the talk about interest rates lately? Feeling like the home buying process is again out of your reach?
What is going on with this market shift?
Get another perspective on the real estate market for Fall 2022 in Huron County. Could this be your opportunity to buy a house you have always dreamed of?
We will go over what the housing market did last month in August in Huron County and how these new interest rates could affect you negatively but also positively.
**Disclaimer: I am not a financial or economic expert. Please seek 3rd party professional advice on your personal situation and finances. **
Huron County Market Overview From August 2022
What is going on with this market shift and where does this latest interest rate rise leave you?
Let’s briefly discuss last month’s market overview for Huron County. In August residential home sales were up to 80 homes, an increase from July. The average sale price was just under $511,000 and the average days on market has increased from 22 days in July to 34 days in August.
Market Shift
It’s been predicted the rates were going to go up since last November, and they did. So no shocker there. Yes, rates were historically low and are they gone? For now, yes.
I know everyone and their mother are chatting about this crazy rate increase so lets explore the other side of this. In the last few years buyers have been FIGHTING for houses, putting anything from ten to a hundred thousand dollars plus over asking to win the house. Not to mention with less inventory to choose from and no contingencies. ABSOLUTELY NO PROTECTION for the buyer!
Interest Rates
Most of us are familiar with the five year fixed rate. You have an Interest rate locked in for 5 years and you don’t have to worry. Where some were locking in at 2%-3% and now you’re around 5% that can be a big shock.
Shifting from the previous 2-3% to 5%. Let’s remember that you would have been stress tested around the 5% mark anyway.
Since 2016 all Canadians have had to be stress tested for a mortgage. I understand your perspective is that you were stressed but still didn’t have to pay the 5% at the end of the day.
*For more information on the stress test, check out this video on my YouTube Channel.
Fixed Rate Vs Variable Rate
WHAT’S THE DIFFERENCE BETWEEN FIXED & VARIABLE MORTGAGE RATES?
A fixed rate mortgage, the mortgage payment and interest rate you make each month will stay the same for the term of your mortgage.
A variable rate mortgage, the mortgage rate will change with any change of the prime lending rate as set by your lender. Variable mortgages can be more risky because the monthly payments are not as predictable as fixed mortgages. But if you are good with your money this can be a good option to explore.
The Opportunity For Buyers
Let’s look at the other side of the opportunity.
Now that were gaining more inventory, you are now as the buyer getting your buying power back. More to choose from, less or no bidding wars at all which means feeling less pressured in our out of your comfort zone, more protection with financing conditions, home inspections and so on.
Yes, you will be paying higher interest rates on the money but you’re not paying crazy over asking prices with no protection or possibly compromising on your wish list just to secure an okay house with a good interest rate?
Do you see where I’m coming from?
Build confidence in your decisions and your financing numbers. $100,000-$200,000 difference can change your payments about $500-$1000 per month. Interest rate hikes are more minimal.
Have you ever heard the saying, Marry The House And Date The Rate. Buy the house you want knowing you’re not locked into the rate forever.
There are different rates to examine. Five year Fixed rates are around the 5%+ mark, just above, up from 3%. The variable rate is the big one people are talking about as these increases are who it’s affecting right now..
Yes does the rate hike seem larger each month with these rate increases, yes of course it does. But buyers stepping into the market who may be paying 100 thousand less for the house they want at a higher rate can still come out ahead with a good financial professional in their corner.
My buyers who had budgets at half a million may have been forced to look at $400,000 houses last year. Less contingencies, less checked off on their wish list and more money paid for the house than should have been needed.
We don’t need to feel gloomy from all this talk, don’t let your co-workers, family or anyone tell you what YOU can afford!
They don’t know your personal finances, assets, liabilities etc. Explore both the 5 year Fixed rate around the 5% mark, just above, up from 3% and variable can still be an option for some as well.
If you feel like it is the right time to buy a house for you, then I highly recommend you do your homework and reach out to your preferred lender to see where you stand. You might be pleasantly surprised at the professional advice they might have to offer you.
Again, this information is intended to be general knowledge I have gathered from listening to financial experts and my own real estate knowledge. I am not professional financial or economist expert advice. Please reach out to those professionals for your own specific advice.
If you’re wondering what your home may be worth in this market, please reach out HERE.
