The market is starting to shift

The market is starting to shift

In the video I released prior to this blog (linked referenced below in the notes)  I was mainly speaking to sellers when I was emphasizing the importance of timing as it relates to the supply and demand curve during this time of the year. Today I will be talking more about the market as a whole and how whether you are a buyer or seller you need, and should, take action immediately!

It is clear today that the distressed foreclosure market of a few years ago is long in our past. We had great gains throughout 2013 and even modest gains so far in 2014, however I believe things are about to slightly change. As you may or may not have heard the FED is planning to increase interest rates throughout the course of next year. No one can be certain as to how much but most reputable sources are stating 0.75% increase within Q1 of 2015 and by Q4 2015 upwards of a total increase of 1.25-1.5%. 

So what does this mean for home buyers and sellers? If you buy now you will be able to take advantage of the extremely low interest rates (which at the time of this writing are the lowest they have been in the last 18 months). Why is this important? Because the same house you are buying for $500,000 today and the same house you are buying for $500,000 next year could cost you over $400/mo more. Wow!! That’s pretty significant. Same example at $350,000 is over $300/mo more.

So if you are a home seller you are probably now asking yourself, with all this talk about interest rates increase and potentially higher monthly payments how is there an advantage for me to sell my home now? Well, the answer is simple. For the most part a home seller is also a home buyer at the same time. You are selling your home to then in turn buy another one, but even if this is not true, and you are just a straight home seller, it is still to your advantage to sell immediately regardless of your next move, I will explain… Going back to the video prior to this blog we know that real estate is based off of supply and demand. What my prediction is once rates start to climb up, the affordability will go down and ultimately demand for buying will go down. Now I do not think it will be anything too significant. However if you are a seller counting every penny of your sale at $500,000 today and fast forward 6-12 months, and you now have to price your home at $475,000 to compensate for affordability, this could have a significant impact on your bottom line. 

Now, I certainly did not write this to say that the market is going to go down or anything like that, in fact I still anticipate the market to be very strong throughout the year, but expect this little shift/change in the upcoming months. With this all said I am extremely optimistic about the remaining months of 2014 and certainly 2015. Without a doubt it will be our BEST year in real estate yet!

So, to sum everything up, in my opinion if you are a seller you need to SELL NOW and if you are a buyer you need to BUY NOW!

Video blog reference: https://www.topproducingbroker.com/list-home-sale-summer

Sources: http://www.bloomberg.com/news/2014-09-17/fed-officials-predict-fed-funds-rate-to-rise-to-1-375-end-2015.html

http://moneytothemasses.com/owning-a-home/interest-rate-forecasts/latest-interest-rate-predictions-when-will-rates-rise

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