In my little niche of the Los Angeles real estate market (that would be the South Bay) home prices are on the rise. Inventory remains low while demand remains high. The first half of 2013 was a worst case nightmare scenario for many buyers as they faced multiple offers, overbids and were often eliminated from the pool of prospective buyers by the almighty cash offer. Many buyers were sidelined as they watched prices creep higher and higher.
To add to buyers’ frustration level interest rates are now on the rise too. Buyers are asking whether they should buy now or later. The easy answer is if you can find a suitable property it makes sense and saves cents to buy now. Prices are at 2004 levels (by my best estimate) and have not yet reached the market highs of 2007 and early 2008. Interest rates are still historically low. Yes, you may have to make compromises such as pay a little more than you would have a mere year ago or re-think your square footage needs. However, your loan rate and the price you pay will be better than those available in 2008.
Now for the “cents” logic: For example, if you purchase a $500,000 home in Los Angeles County at 4.75% interest rate with 20% down payment your monthly loan payment, including property tax and home insurance, would be $2,707.42. Using the same criteria but bumping interest rate to 5.75% the same house payment would be $2,955.12 Yes, a one percent hike in interest rates will cost you nearly $250 each month.
The good news for buyers is, from my vantage point, the new listing feeding frenzy is cooling off a tad. Right now I have an offer out and there are only four offers–much better than 14 or 35 and I’ve had buyers in both of those offer pools this year.
For help in evaluating your options as a buyer or seller in this rapidly changing market contact Norma Toering and Team. The media reports “old news” in today’s fast paced and fluid real estate market. We work daily in the eye of the real estate storm and can help you stay abreast of trends as they happen–not what happened 30 or 60 days ago.
– Norma (310) 493-8333