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What is happening to Interest Rates?

by Cynthia LaChapelle

 

Interest rates have been rising all year. This has affected your home buying power. The higher the rate, the less home you can afford for the exact same payment. In other words, the same-priced home costs you more per month. For more information on buying power, go to  For Buyers/Questions.

Example:  A $425,000 conventional loan at  3.95%  equals  $2016.78  PI (Principal and Interest)

                                     The exact same loan at    4.54% equals  $2163.53 PI  (Principal and Interest)

                                      $146.75 more per month.  (Not including tax, homeowner's insurance,  etc.)

Interest rates show no signs of stopping or reversing. In fact, the Federal Reserve raised interest rates on Wednesday. Chairman Jerome Powell said that two more increases were on the way this year. (Mortgage rates fluctuate based on many factors not just the Fed rate.)  See Rate Table at bottom.

One help in purchasing power is that the caps on Fannie Mae/Conventional Mortgages and FHA/HUD mortgages have increased for this year. This allows you to purchase more home and/or need less down payment.

Loan Limits for 2018

            HUD                                         Conventional

  • Wake $318,550                      $453,100
  • Orange  $379,500                    $453,100
  • Durham  $379,500                 $453,100        
  • Johnston  $318,550               $453,100
  • Chatham  $379,500               $453,100

 

2018 Interest Rate Chart

 

Data for this Date Range

 

June 7, 2018

4.54%

May 31, 2018

4.56%

May 24, 2018

4.66%

May 17, 2018

4.61%

May 10, 2018

4.55%

May 3, 2018

4.55%

April 26, 2018

4.58%

April 19, 2018

4.47%

April 12, 2018

4.42%

April 5, 2018

4.40%

March 29, 2018

4.44%

March 22, 2018

4.45%

March 15, 2018

4.44%

March 8, 2018

4.46%

March 1, 2018

4.43%

Feb. 22, 2018

4.40%

Feb. 15, 2018

4.38%

Feb. 8, 2018

4.32%

Feb. 1, 2018

4.22%

Jan. 25, 2018

4.15%

Jan. 18, 2018

4.04%

Jan. 11, 2018

3.99%

Jan. 4, 2018

3.95%

 

All information contained is deemed accurate but not guaranteed. Reader should conduct their own due diligence and not rely on these figures and calculations. Need a Loan Analysis?

A House, A House, my kingdom for a house...

by Cynthia LaChapelle

Want to buy a single family house in this area? How many bidding wars have you been on the losing side of trying to get an average home of an average price? Why is this happening, and when will it end?

The big story in our current market is how hot the market really is. Prices keep rising as inventory levels keep decreasing. Boomers aren't selling and builders can't make up all the slack.

Supply and Demand

It's a Catch-22 that the Boomers don't sell, because there aren't enough homes to move up or down into. Add that the new home builders got behind in production during the downturn last decade. However, now that they are building again, they are building higher priced homes.

The Triangle area just hit a historic high sales price - an average of $303,000 for our market, according to Stacey Anfindsen. He is a long time appraiser and provider of market statistics to the Triangle MLS, author of the TARR report and acclaimed expert on local market data.

Anfindsen says that annual prices usually peak around the beginning of the third quarter and dip in the fourth. The average price could stay above $300,000 for the first time.

Builders have starting prices for single family homes from $400,000 in much of the Triangle, and that does mean starting price. You expect upgrade charges, but I've noticed that many of the new homes I'm selling now have an added price of tens of thousands of dollars for every lot. Nothing is included.

 Below that price point is generally townhomes and condos. The inventory of townhomes and condos increased by double digits over $199,000, due in large part to the new construction. Most of that construction is now hitting the $250,000 and up buyers.

Conventional Loan Limits

Those wanting a new single family home have a second problem. It can be more difficult to get a loan above $424,100. These "conventional" loans are packaged and sold on the secondary market (think Wall Street) so the lenders' source of funding is constantly replenished.

 

Most counties have a maximum mortgage limit of $424,100 for a single family residence, ($543,000) for two units, ($656,350) for three units & ($815,650) for four units. These limits are applicable for purchase and refinance mortgage loans.

It's generally easier to get a conventional loan. Fewer buyers are eligible to buy homes the further you go above the $424,1000 limit.  

That circles back to supply and demand. Offsetting the loan limits is that builders are providing a supply of single family homes. The effect is a slight softening of the higher priced resale homes, because the builders are tapping into a limited market of buyers. 

If You Want to Do Anything in Real Estate, You Better Know the Rules

by Scheryl McDavid
Scheryl McDavid
Broker with LaChapelle Properties 

 

It’s an understatement to say that internet shopping has taken over the real estate industry. Who hasn’t used Zillow, Trulia or Redfin to find their next home or investment? So, my interest was definitely piqued when my mentor offered me her copy of Zillow Talk: The New Rules of Real Estate by Spencer Rascoff and Stan Humphries, who chronicle the rise of their powerful real estate search app and all the data that went into creating it. And that, my friends, is exactly what makes Zillow so useful, it’s the data. More than 3 terabytes of it (that’s one million million).

If you’re thinking about selling a house, here’re some pricing pointers from the book that you’ll want to keep in mind:

  • On average, sellers overprice their homes by 6.9%
  • When a home is overpriced, it tends to sell for less than market value
  • Overpriced homes can almost double the time it takes to sell them (often as long as 4 months!)
  • 47% of sellers end up cutting their list price to make a sale

Here’s the good news:

  • Houses priced at fair market value tend to sell for 2% above the asking price
  • Homes with “psychological” or strategic pricing — where you place a “9” in place of the last non-zero digit — may sell up to 4 days faster and for slightly more money than those with all zeros in the price ($299,900 vs. $300,000, for example)

Published in 2015, I think a number of Zillow’s findings are still relevant for our area today:

  • Negative equity reduces the housing supply; “under water” homeowners don’t sell when there’s no down payment for their next home
  • Low mortgage rates create higher demand because of easier financing
  • Both of these conditions create a market with fast-rising prices (North Hills, Raleigh, I’m looking at you)

 All this sounds a lot like another real estate bubble might be coming, so I appreciated, especially, the authors’ refusal to offer predictions of how the real estate market will perform following the 2008-2009 crash. Instead, they use an interesting quote from Donald Rumsfeld, “There are known knowns … there are known unknowns … But there are also unknown unknowns.” Rascoff and Humphries suggest that America has the data and the understanding to avoid another devastating bubble.

The main takeaway is this, read the data, understand the data, and get to know your area really, really well. And yes, even with Zillow, Trulia and Redfin in your pocket, this can be overwhelming. So, if you’re going to buy, sell or invest in real estate, get some help from a professional who can guide you and there will be a lot fewer unknown unknowns to hurt you.

Home Staging

by Cynthia LaChapelle

You may have heard that it doesn't take much effort to sell a house in this market these days. I've even heard other realtors say they don't bother to stage or prep a house for market. While you can get away without working at it, I don't think it serves the client. It’s commons sense that the house that has buyers fighting over it and generating a bidding war is going to go for a higher price than the one that people will settle for.

You don't have to go all out, and there is a perfect comfort level for every seller.  Some clients want to do whatever is necessary to get top dollar, some are willing to do only simple changes that will double their money or better, and some just want it sold without as little hassle as possible. I let them know what I recommend based on those desires. 

The idea isn't to present the house the way it's most comfortable to live. This is a show. We start with cleaning and decluttering. If you are moving out of town, you may want to get rid of a lot of possessions before you take the time and expense to pack and ship a lot of things. You can donate household items to charity and get a tax deduction. You can also box up things you won't need to use for a while along with some larger furniture that may make the rooms seem smaller, and put these in storage until your move. You will be happy you've done this in the period of time between contract acceptance and your closing date, because that is a little stress of your back during a fairly hectic time.

After I give my opinion, I bring in my Stager, Honey. (Yes, that her name and yes, she is very southern.) I pay her for one consultation, and we make the most of it. Since I've already gone through and given my advice and opinions she covers a lot in that session. If we haven't made a decision about repainting in some areas, she can help make that decision and which colors may work best with the carpet, tile, counters and things that can't be changed.

She picks items that need to stay and need to go. She goes through the closets and storage to find decor items that are just the thing to make a room pop. Best of, she is the queen of artful rearranging. She makes lovely scenes on walls and surfaces that were jumbles. 

I keep up with the trends in home styles and decor so that I can advise clients and market their homes. Colors to put a house on the market trending now are grays and beige. Both color families can work, and there is a hybrid,“GREYGE." Somehow these are both at the same time and tend to change as the light changes.

Some of Honey's current favorite colors are Accessible Beige, Silver Strand, Rainwashed, Quietude #6212, Agreeable Gray, Urbane Bronze, Sea Salt (Sherwin Williams Colors). 


I learned a trick of the easy way to pick the ceiling color. You don't want stark white ceilings, but you usually want a nearly white color.

(Remember this is to sell your house, not a design statement.)  Paint ceilings a 25% saturation of the wall color. You don't have to worry about finding the lightest possible color in the color chart that correlates to your wall color any more.

My next blog will have more on choosing colors and fixtures that drive the buyers to a bidding frenzy, especially what is cost efficient.

Market Update

by Cynthia LaChapelle

This is an amazing time to get a property on the market. The Triangle area supply of homes for sale is down to historic lows, while prices have been rising. The amount of time required to sell is also down. Here are some facts about the year-to-date statistics:

  • New Listings in the Triangle region increased 2.2% to 4,204.
  • Pending Sales were down 43.2% to 1,752.
  • Inventory levels fell 16.2% to 12,545 units.
  • Prices continued to gain traction. The Median Sales Price increased 10.0% to $231,000.
  • Days on Market was down 11.5% to 54 days.
  • Sellers were encouraged as Months Supply of Inventory was down 22.4% to 4.6 months.

The general division between a Seller’s Market and  Buyer’s Market is at the point of having a six-month supply of inventory. More inventory indicates a Buyer’s Market, less inventory indicates a Seller’s Market. 

Interested in selling?  What will it take to get your home on the market?  We can answer that.  Maybe you're worried about missing out on your dream home in a hot market.  Use our custom search tool so you never miss a listing!

Yes Virginia, This is a Seller's Market...

by Cynthia LaChapelle
If you are in the right place and prepare your home properly
 

The market switches between being a Seller's market and Buyer's market at six months as average time listed on the market. You may know that we entered a seller's market in most parts of our area last year and earlier. You also may have heard rumors recently about bidding wars and houses selling on the first day that they hit the market. Both are true. (By the way, when a house shows a house was listed 2-5 days on the MLS until pending, that usually means that it took that long to negotiate which buyers to take, the final price and get it in the computer.)

The biggest surprise is that the market heated early - in mid-January. That is well ahead of the usual Spring bump in the market. Showings normally are the highest numbers in March and April, followed by the highest number of closings in May and June. (It often takes 30-60 days to complete escrow.) I have been involved in several multiple bidding wars this year in the western wake county area. We're past trying to negotiate the best deal in most instances. We have moved into the market where the broker's job is to be able to get the house for the buyer. I've lost houses because we showed up on Day 2 and others because we didn't bid high enough above List price. Register here to have custom listings emailed to you as they appear on the market http://www.buywakecountyhomes.com/

One caution to the person who is thinking about selling, however. Most of the houses that are sought after and fought over have been put into beautiful condition. They are freshly painted, usually have new or newer carpet, updated kitchens and baths and very little (if any) brass. Often the buyers ask if the sellers are still living in it. The ones that are dirty and need work will still sit a while. They won't usually have more than one offer at a time, which is the way that sellers get higher than list price. People don't want to buy your dirt and mess.There are numerous resources available if you want to know how to fix up your home for sale, including a number of articles on our website.  Interested in getting an idea of how your home compares to others in your neighborhood?  Check out this website http://www.sellingwakecountyhomes.com

However, beware of whether or not you can get the house to appraise in a rapidly rising price market. Houses in short supply go for higher prices than when the buyer has his pick of homes. Most appraisers want to value the homes at least where the buyer has paid, but they do have constraints put on them by the banks who have hired them. (They work for the bank, but are paid by the buyer.) Different types of loans and different mortgage companies put varying restrictions on the appraisers. They do use past data, which will be lower in a rising market. Whether you are a buyer or seller, it is wise to remember that when you win a bidding war, you will still need to be cognizant of the possibility of a low appraisal. The bank will lend only on the amount of the appraisal, not the sales price.

Takeaways:

  • Buyers need to watch for new listings closely and view them immediately
  • Sellers need to spend the time and money to make their homes market-ready
  • A properly prepared home will sell very quickly at a good price
  • Be cautious of appraisal amounts. The buyer may or may not be willing or able to come up with the extra down payment.

Displaying blog entries 1-6 of 6