It is interesting that even with all the uncertainty with when the Fed will raise the short term rates that long term 10 yer and 30 year rates continue to fall. We are still looking at 4.000% or less for most 30 year mortgages. With Fed policy going on 6 years low low rates, we will begin to see rate tightening soon.
How will this affect the value and purchasing power of your future mortgage? Value continues to go up in spite of this fear of higher rates. I believe that the continued confidence in the economy and more importantly lack of good inventory will continue to fuel this trend. There is, in my opinion, a dearth of pent-up demand because there are more buyers than sellers. I see this first hand. I have buyers that out looking and can’t find what they want in their price range. One statistic I heard is that home appreciation has leveled off nationwide around 4% per year. Depending on where you buy in Chicago, it can be more or less than that. Bottom line is that we need more “good” inventory to meet that demand.
What is good inventory? The last 5 homes that I have sold have gone under contract in less than tw0 weeks. They all were very nice and clean homes, well-maintained and picture well in different price ranges. Most have been updated in last few years. That’s what today’s buyers want. A move-in ready home. They don’t have to look like model homes but it helps.
Today’s buying power is much greater than in recent years but it will not last forever. If you are on the fence about purchasing, don’t waste too much time because this rate environment won’t be around forever.