Jim Valentine: interest rates are rising

Jim Valentine on real estate

After all these years of bestowing the blessings of exceptionally low interest rates and all of us enjoying their consequent benefits, we are now entering a new phase. So many things are now contributing to the changes that the inevitable has happened, rates are climbing. They’re still very good, but not the only once in a lifetime we’ve enjoyed recently. So we move on.
What are the consequences? Maybe they’re not as bad as one might initially assume with this not-so-surprising surprise. Think about it. Higher rates mean higher payments. Does this mean lower prices? Under normal circumstances, it would seem so, but these are not normal times. House prices remain at their high level. In addition to premium real estate prices, rents are also very high. Think about it. If rents are so high, why wouldn’t someone pay a little more interest for the comfort of stable ownership?
Rents have skyrocketed faster than house prices these days and are often at or above what a house payment would be. If the increase in interest rates increases the payment a little, it is very likely that the house bought at a high price still offers a better opportunity over the next 15 to 30 years than paying a high rent and d always be subject to rent changes. or notice of departure.
Some new loan opportunities have already opened up. In just a few days, we discovered new loan opportunities that were unthinkable in years past. They pose no risk to the borrower and open doors that were previously locked. The unthinkable is doable. Most of these changes involve lenders holding the loan in their portfolio and not selling it in the secondary market. They include loans on manufactured homes built before 1976, money on good land, money on second homes, construction loans, etc.
We believe that lenders anticipated this interest rate change and created new loan programs to compensate for the rate change. This is good for the loan consumer and for the sellers. Both will gain from this creativity. Call your real estate agent and ask what you can do in this market with your financial situation. You might be surprised by a new loan program, a drop in the price of a house, a new house on the market that suits you, etc. You have more variables to consider to achieve your goal. Work them.
The demand for housing always exceeds the supply. The supply challenge will drive the construction of new homes, which will remain high due to the incredibly high cost of materials. Don’t try to get prices to drop too low too fast. Most homeowners today have equity and loans at reasonable prices, or they own their homes freely. We are not facing the house of cards real estate economy of the 2008 era that led to the major meltdown. We may be eating less steak in these times of inflation, but the housing market should show resilience as we weather another swing in financial markets.
Do not dwell on the principle of raising prices. If you want to mourn the loss of the opportunity to get a lower rate loan, spend some time contemplating your purchase loss when home prices were lower, then shift into high gear and make a decision to the time. Some real estate prices may or may not fall. As always, trying to time the market is like catching a falling knife. Settle in for those adjusted times and move on. Make a plan and work your plan. Real estate is not a short-term investment, put on your long-term glasses and adjust the shade…preferably pink. Consider the joy you will feel everyday in your ideal home. Then consider the price of that joy and ask yourself what you are willing to pay for it. Will a one or two percent increase in interest keep you from reaching your goal?
When it comes to choosing professionals to help you with your real estate needs… experience is priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. [email protected]

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