From Ted Gosnell at First Home Mortgage.
The good news is that home prices are up by almost 11%, the highest increase in over 7 years! I’ve even heard several economists’ claim we’re headed for another housing shortage and possibly even another new construction boom. Others worry that the higher prices are the result of a flash of investor purchases and that these very same purchases will be back on the market within 6 months. Regardless, the biggest increases seem to be in the lower end of the housing market or to put it another way in “The Cheap Seats”.
The bad news is “The Cheap Seats” just got more expensive. Mortgage rates are up to over 4% for a Conventional 30 year fixed rate mortgage and probably the only way they’ll come back down is if these increased housing sales and values fall flat. That said, your Pre-Qualified buyer now qualifies for about $10,000.00 less house than he or she did last week and if rates continue upward, their qualification will continue downward. It’s also bad news for the buyer who was holding out for a lower price on their offer, if they would have taken the $5,000.00 higher counter last week; their payment would be about $20.00 a month less than if they get the $5,000.00 lower price this week. As the saying goes “You can’t win for Losing”