2 Factors That Affect Our Market the Most

Interest rates may be going up, but do you know where they were 10 or 20 years ago? As you’ll see, the low rates of today are a rarity and worth taking advantage of.

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Our market right now is defined by two factors: housing supply and interest rates. I’ve got two charts to share with you that demonstrate exactly where our market is when it comes to affordability.

The first chart shows historical rates from Freddie Mac for 30-year fixed rate mortgages. The big takeaway here is that today’s interest rates are still 3.5% lower than the 30-year average. A lot of first-time homebuyers aren’t aware of this. Knowing that rates are up to 4% doesn’t sound that great when you don’t understand the context. For example, if you look back to 1987, you’ll see that rates were over 10%. At the same time, this is the fourth best year for interest rates in the last 30 years, even if the rates are up slightly from last year.
Historically speaking, rates are rarely this low.
If you’re trying to save up for a down payment, look at what a 1% interest rate hike would do to your payment to see if it might be a better idea for you to just buy now with rates where they are and a lower down payment. If home prices are going up by an average of $10,000 to $15,000 every year, is saving up $15,000 really worth it?

The second graphic is similar to the first but shows interest rate changes over the last 200 years instead of the last 30. When you look at this chart, it’s crazy to see that rates were at 16% in 1980. This is just another example that shows how good we have it with our current interest rates. Even with low inventory, there are still plenty of homes on the market available for purchase.

Hopefully you’ve found this information helpful. If you have any questions in the meantime about buying or selling a home, don’t hesitate to give me a call or send me an email. I would love to hear from you soon.

Chart 1: 30 fixed rate mortgages

Chart 2: 200 years of interest rates