After The Party, Reality Sets In
Housing prices have increased with great celebration in the media. Curiously, when the costs go up due to interest rates, folks see an ugly side to the trend. Sue McAllister writes at MercuryNews.com "Mortgage rates are creeping up slowly but relentlessly, pricing more residents out of the Bay Area's housing market." And then comes to the conclusion, "That means some residents can't buy houses because they won't be able to afford the higher monthly payments."
The hangover has just started for some recent buyers as their adjustable rate mortgage comes due. "Last spring, a buyer with a $450,000 loan at 3.47 percent had a monthly payment of $2,013.17. This year, with the increase capped at a typical two percentage points, the rate would be 5.47 percent, and the monthly payment would be $2,531.76." Ouch!
And one mortgage broker thinks owners may be looking for the exit. "Doug Jones says he thinks a big pool of homes could hit the market this year, especially as many homeowners with lots of equity in their homes think to themselves,'If I don't get this house sold, rates may go up and I may not have the qualified buyers.'" Coffee anyone?