BiggerPockets

Buy Now in Reno - Interest Rates Are Rising

Monday, June 15

Buy now or pay later is where the real estate market is heading now.  This is especially true in light of the rapid rise of interest rates in the past few weeks.  According to a RealtyTimes.com report, sales in the Western Region show that prices are flat.  David McCarthy, CEO of Research Services, says that, when a market goes flat, the bottom of the market has been reached.  When the bottom of the market is reached, prices will then begin their upward climb.

    * Interest rates are up and this has a much more dramatic affect on home buyers than the temporary loss of home values.
    * Home prices are stabilizing.  When the bottom of the market is reached, home values go up.

A mortgage interest fixed rate lasts for 30 years, meaning tens of thousands of dollars in interest paid over the life of a loan.  The loss of a property's value is temporary.  In the long term, a home will always have more value than the original purchase price.  You may be able to buy a home for less than a few years ago.  But, you cannot buy a Reno home for what it sold for in 1970.

What I really want to address is the rapid rise in interest rates.  Interest rates have gone up dramatically in the past three weeks.  Rates are up a full percent over last month's rates.  In the beginning of May, the interest rate was 4.91%.  Today, interest rates are as high as 6.25%.  No one is sure how high they will go.  Even if interest rates do drop in the future, the days of historical low interest rates are gone.

Fears of inflation caused by the massive stimulus spending has caused investors to get the jitters.  Long term Treasury Bonds, which is what interest rates are tied to, are up and so are the interest rates.

Nobody likes paying higher interest rates, but few home buyers realize how much even a slight increase can affect them.

Higher interest rates means:

    * Less Buying Power
    * Affects Qualification
    * Higher Mortgage Payments

For the value-conscious buyer, now is the time to buy in Reno.

Charlene Hamilton, your Reno relocation specialist

Comments

1. 

   Will Barnard Reply
   over 2 years ago

   Anytime is a good time to buy if you buy right. Trying to time markets is much too difficult. Simply buy right and you are a success.