Buying a house is difficult to begin with, then in 2020 COVID hit, and things became even harder. What does this mean for the first-time homebuyer? It seems almost impossible to purchase anything right now but for first-time home buyers, it is even tougher.
Purchase prices in Miami are through the roof, and not to mention there are about five houses in the market to pick from with what feels like a million people looking to buy. (Ok that’s dramatic, I know I’m Cuban.) But it feels like it right?
Finances seem to be at the top of everyone’s minds during this ever-lasting COVID-19 pandemic, especially with the all-time low-interest rates….but we know this will not last forever and there is a big change in the foreseeable future. Interest rates have already increased. According to Fox Business, President Joe Biden plans to increase rates seven times this year alone. What does this mean? Prices on homes will begin to drop since mortgage rates will increase. With the increase of mortgage rates, there will be a decrease in affordability causing a decrease in the buyer pool.
Say you have a budget of $2,000 a month for your mortgage payment (before taxes and insurance). Right now with a 3% mortgage rate you can afford about a $474,000 home! In just a few months, with the planned increase in mortgage rates, let’s say you qualify for a 5% mortgage rate. You can now only afford a $372,000 home. (https://inabahner.com/2020/08/03/interest-rates-make-a-big-difference-when-you-buy ) Yikes. Clearly, these monthly payments vary on your down payment, annual percentage rate, and credit score.
Let us further look into the situation. Currently, we are in a Sellers’ Market. In other words, we are in a housing market where there is less inventory and higher demand. The seller has the upper hand. Before federal rates increase, we suggest if you have any interest in selling your home, you should do it now! Take advantage of low-interest rates (higher affordability in buyers) and get the most out of selling your home. Before you know it, there will be a sweeping decrease in a buyer’s purchasing power thereby shrinking the buyer pool for your gorgeous home in our sunny city! Sellers, this is as an opportunistic moment to leverage, reinvest, and enjoy your equity. We are here to help you and guide the way!
If you’re looking to sell your home, we are here for all your real estate needs!
Call us today!
305.667.5235