I hope your summer is off to a great start! As we read headlines every day about rising interest rates, increasing home values, and the challenges of affordability, I wanted to share some tips about what this market shift may mean for you or your clients whether they decide to keep or sell their house.
Keep & Buyout Tips:
Qualifying for a loan is not easy anymore. Presuming one party needs to refinance in order to buy out the other party and keep the house, they need to be aware that the double whammy of rising interest rates and elevated home prices may make the decision moot. That’s why it’s vital that they contact a lender to get prequalified before spending time negotiating or seeking an order for buyout.
Here’s why: What was possible a mere 2 months ago in terms of qualifying for a loan may not be possible now.
The dramatic rise in interest rates, the likes of which many real estate agents and brokers today have never before seen, has sharply impacted affordability. Rates are now 2.7% higher than they were at the start of the year and are nearly double what they were last June. In fact, it now takes $150,000 more in annual income (national average) to afford the same house a buyer could afford at the beginning of the year. Higher debt-to-income ratios may be deal killers for buyouts.
Also — if your client or opposing party is working off of a preapproval that’s more than 30 days old, it’s time to get a new one. In the real estate industry, we don’t consider a 30+ day old approval viable anymore.
Sell the House Tips:
If a buyout is not possible and the only option is to sell the house, the current market impacts that as well. Here are some issues to consider:
From my experience, it can be a challenge to get selling homeowners in the right frame of mind when they are in the middle of a market shift. The market shift often happens faster than the mindset shift does and this is an expensive delay. Using the most current data and trends can often tell the story so that clients are prepared and realistic.
As always, please feel free to reach out to me with any questions about the real property matters in your specific situation or case.
Thanks for reading.
I take a holistic approach…it's not about the "bricks and the sticks" for me. It’s about how I can help each family or individual fulfill their long-term goals.Let's Connect