Blog2Information from Tracie Southerland - Opes Advisors
Calendar Posted Thu Sep 02 12:00AM


We are in a unique time in history. Home prices are down even in our most desirable areas and interest rates are at the lowest in 50 years.

Clients I speak with often ask the questions, "But, what if housing drops further? And also, where are interest rates headed? How can I time the bottom of the housing market and the interest rates?"

As all of us know, we can never perfectly time "the bottom" or "the top". However, saying that, we think that now is one of the most opportune times.

There are two indicators that we believe illustrate this point. As shown in the graph below, after nearly a decade of deviating substantially from long-term projections, housing prices are now reverting closer to their 40-year trend line.



As illustrated in the graph below, mortgage rates are at their lowest level since formal recording of rates began 50 years ago.



The table below shows the impact of higher interest rates on purchase price. Generally speaking, for every 1% difference in rate there will be about a $86,000 differential in the purchase price for approximately the same monthly payments. Example below:


Note: Tax situations for every client will effect these results slightly.

In summary, a rise in interest rates will quickly offset any benefit of further price drops. We can't time the market, and we can't claim to know the future. However, when you look at the facts above, it is apparent this unique time in history provides our clients with an incredible opportunity.

Regards,
Tracie

Tracie Southerland

Financial Advisor & Mortgage Advisor
Email · Biography
650.319.1603
License 01190919

 

 

 



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