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How Smart Home Sellers Benefit From The Ups and Downs Of Rising Home Mortgage Interest Rates

Tuesday, September 10, 2013   /   by Ira Miskin

How Smart Home Sellers Benefit From The Ups and Downs Of Rising Home Mortgage Interest Rates

     Branch Managers and Senior Loan Officers from each of the lenders who consistently serve our Clients met with our Team to keep us ahead of the pack when it comes to helping our Clients wade through the ups and downs of rising home-mortgage interest rates and appreciating home values.    What’s going on, and how will these changes affect the sale of your current home or the purchase of your next home?


     According to recent national news reports, the number of sales of existing homes across the USA is the highest it has been in 5 years.  But in the June report by the National Association of Realtors, “pending sales” nationwide were down.  Yet, the highly regarded Case-Shiller report for the same period shows home prices rising, even as home loan interest rates rose.  So is it good news or bad news for buyers and sellers?  The right answer is that it depends on where you live.  No matter how the housing market is performing nationally, conditions in your community could be worse or better because all residential real estate sales are local. 


     In Cobb County, for example - a very diverse housing community with a wide range of housing styles and ages – divergent national trends only tell part of the story.  The Atlanta area is divided into several hundred distinct market Areas.  Cobb County is divided in 7 Areas, each with its own housing characteristics, pricing and trends. Here are three Cobb County examples. In Cobb Area 74 which contains parts of both Marietta and Kennesaw, home values rose 16.63% over 2012 prices but were still down 14.92% from the market high in July 2007. In Cobb Area 81 comprising a portion of East Cobb, home values recovered 18.9% of value over the same period in 2012 but are still down 19.87% from the market high in 2007.  In Cobb Area 73 with communities as different as Smyrna and Powder Springs, homes values are still 26.67% below the market high in 2007, but has recovered a whopping 43.8% of value over July 2012 sale prices.  The message is, in Cobb County home values are recovering.


     Interest rates on home loans are also on the rise, which would seem to place a damper on home sales.  Rates have risen to a market average of 4.51% for a 30-Year Fixed rate loan from a market average of 3.75% for a 30-year fixed rate loan just 1 year ago.  Yet in Atlanta as a whole, sales have kept pace with rising prices and rising interest rates; and in Cobb County, the number of homes sold to date in 2013 vs. homes sold during the same period in 2012 has risen by nearly 6%.  Rising interest rates and rising prices have not curtailed the housing market; but it has changed who is selling and buying.


         Who is selling and buying? Even though the overall economy remains sluggish, the increased number of sales despite rising prices has caused many sellers concerned about their home’s value to take a second look at the market.  Some sellers could not, or would not sell at depressed prices just to take advantage of the market to move up to a larger home at a lower price.  Some however did make the switch and benefitted substantially by making up the loss on their previous home by snaring a “great deal” on their new home, and are receiving the benefit of incremental appreciation.  A seller in Cobb County that may have sold a home in 2012 for 20% less than top market value back in 2007, and purchased a home wisely just a year ago, saw their new home add between 19% and 44% of increased equity value over the previous year’s home prices in just one year of recovery. By comparison, interest rates only rose around ¾ of a point.  The monthly difference on a $200,000 mortgage in monthly payments is only $88 per month.  But a 19% home value appreciation is worth as much as $38 thousand dollars of equity.  Is that worth $88 a month?  If home values continue to appreciate at reasonable rates of recovery, it still may take another 5 years to get back to the market highs.  But if the sale of your current home facilitates the opportunity to benefit from the market lows, and interest rates do not spiral upward but increase gradually as the economy improves, the leverage of selling your current home in today’s market to benefit from market recovery appreciation in a larger, more valuable home could be the smart residential real estate move in the coming year. 


     Selling and buying homes in any market can be complicated.  Don’t let a fluctuating market scare you from taking advantage of rising prices despite rising interest rates.  With the right Team in place, one that brings Agents with top negotiating skills, backed up with top marketing experts, and a support team of qualified lenders, inspectors, appraisers, researchers, and more, much of the uncertainty can be anticipated, and profitably factored into both a Sell and a Buy.


     For the readers of this HousesAtlanta.com blog, who have an home to sell in order to purchase your nxt home, you can call us direct at 770-672-8732 and ask for a free and confidential market analysis and in-home evaluation to help you understand more fully what your home is worth and how you may be able to get top dollar in today’s market to leverage your purchase of a new home while prices still hover below the market highs despite rising interest rates.  And also ask about how to determine the best strategy for finding the still available “great deals” that may be hidden from the average home shopper.  To prepare for your in-home evaluation you should also ask for a Special Report titled:  27 Valuable Tips You Should Know To Get Your Home Sold Fast and For Top Dollar