NAR Chief Economist Lawrence Yun had this to say in a recent article by Robert Freedman for REALTOR MAG on interest rates and affordability:
"Yun is forecasting the rate on a 30-year fixed loan to rise to 4.3 percent by the end of the year and then to about 5 percent at the end of 2017. These are “very low by historical standards,” he says.
Concerns are shifting from escalating rates over to the lack of home inventory and affordability issues. Yun says home prices are rising about 7.5% annually on average and household income only at 2%. This scenario is playing out accross the U.S. and cities & communities are taking notice. From California's San Francisco Bay area to Newton, MA (part of the 10th most expensive housing market in the nation - NPR) teachers with 6-figure salaries are priced out, spending 50% and higher of their salary for rent/mortgage not including utilities. NPR has that story and you can LISTEN TO IT HERE.
We don't see a shortage of buyers, but here on the North Shore, there is a definite need for inventory. Thinking of selling? Now's a great time. How a 1-2% increase in interest rates will affect buyers in this market remains to be seen. Multiple offers, bidding wars and sales far over asking are a recurring scenario right now, provided the property is priced and marketed professionally and accurately. Stay tuned, we'll keep you posted.
