The Interest Rates are Down but Has the Cost Gone Up?

A lot of buyers know that rates are down, way down, and therefore feel they don't need to be in a hurry to buy. But there's more to the story than that.

The Housing Affordability Index from the National Association of REALTORS® shows the drop in interest rates over a period of time since 2009.  The interest rates for were 4.37% in January, 2012, and down to 3.81% in June, 2012.  In January and February of 2012, the monthly payment as a percentage of income was 12.% and 12.0%, the lowest for the entire period of the chart, but increased to 13.9% in June. That means a buyer is spending a larger percentage of his/her income on mortgage payments. 

Yes, rates are low, but with low housing inventory all across the nation, and more buyers than there are sellers, there is an upward pressure on prices.

And why is that? Because the median home price went from $154,600 in January to $190,100 in June, a 23% increase. These home prices are on a national level.

So what is going on locally? Many areas are still trending downward, but upward trends are happening all around:  The average home price in Signal Hill has gone up .8% annually, and 23% comparing August 2012 to August 2011.   The average home price in Belmont Heights/Belmont Shore/Naples (90803) has gone up 10% over the last 12 months.  The median sales price in Cypress is up 8%; Long Beach median sales price is up 1.4%; Cerritos is up 11.3%; Bellflower is up 8.5%. If you would like a monthly price report on one of these areas, they are readily available to send to you.

One of the most popular posts on this blog was The Cost of Waiting to Buy which continues to tell a part of the story.

Is now the time you're ready to take action?