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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.

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