On Sale

With interest rates so low, one could argue that money is essentially on sale.

It’s actually half off.

30-year mortgage rates hit 3.75% which is exactly half of their long term average.

Rates have averaged 7.5% over the last 40 years so today buyers are getting half of that rate.

The “sale” on mortgage rates creates a significant savings in monthly payment because of the 1%/10% rule.

For every 1% change in interest rate, the monthly payment will change roughly 10%.

So when rates go up to 4.75%, a buyer’s payment will be 10% higher.

For example, the principal and interest payment on a $400,000 home with a 20% down payment at today’s rates is $1,482.

If rates were 1% higher, the payments jump up to $1,669.

Posted on August 15, 2019 at 2:27 pm
Jon Holsten | Category: Buying, Housing Trends, Northern Colorado Real Estate | Tagged , , , , , ,

Why No Bubble

Below is a slide he shared at our recent market Forecast events.

It shows U.S. Home ownership rate, which is simply the percentage of the population who own their home (versus renting).

The long-term average is 65% represented by the red line.

In the graph you can clearly see the bubble forming. Starting in the mid-90’s, driven by several political and economic factors, more people than ever before became homeowners.

 

 

Then, starting in, 2008, the bubble burst and the percentage tumbled back down.

Now, as you can see, we are back at a “normal” level that resembles the long-term average.

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If you would like a copy of the entire Forecast presentation, go ahead and reach out to us. We would be happy to put it in your hands.

Posted on February 1, 2019 at 6:08 pm
Jon Holsten | Category: Fort Collins Real Estate, Housing Trends, Northern Colorado Real Estate, Windermere Real Estate | Tagged , , , , , , , , , , ,