Real Estate Today
We were just handed a belated Christmas gift with today’s announcement by Freddie Mac, one of the government sponsored insurers of home mortgages, that the interest rate on a 30 year fixed mortgage is at its lowest level in history at 3.91 percent. Last year at this same time the average rate was 4.81 percent.
That is good news for both buyers and sellers. With today’s interest rates, the payments on a $165,000 loan would have a principle and interest payment (P&I) at $779.20 per month, a savings of $87.50 per month, or a 30 year savings of $31,500, compared to interest rates a year ago.
To get a better grasp on the savings as compared to the year 2008 when prices and interest rates were up, the calculated savings on interest alone would be: $94,937 over the 30 year term, a savings of $263.00 per month. This savings alone would allow a prospective buyer to have a purchasing power of $55,850, more than they would have had four years ago.
We need to add to this package of savings the fact that home prices are approximately 25% lower than they were four years ago. A $234,000 home in January 2008 would now be selling for around $175,500, a $58,500 savings. Let’s couple that with the interest savings at today’s rates and we would have a total savings of approximately $153,350.00. This combined savings is more than half the original value of the price of a home in 2008.
When you stop to examine the total picture of today’s housing opportunities, it is almost mind boggling. If I could look into my crystal ball and see into the future one year, I could envision prospective buyers trying to kick themselves in the seat for not taking advantage of today’s buying opportunities.
I predict that interest rates will be higher. They most often are after a presidential election. If the trend we are seeing in today’s real estate market in our area continues, we surely will see higher prices in a year. They have already gone up in the last six month according to the Utah County Association of Realtors.
So if you have made a New Year’s Resolution to be in a new home this year, my advice would be, “Don’t hesitate and put if off any longer. Get in and see your favorite lender today.” If you don’t have a favorite, ask a Realtor for some suggestions. Until next week keep smiling. Email your questions to: firstname.lastname@example.org