Real Estate News About The South Orange County Coastal Communities of Laguna Beach, Dana Point, San Clemente, Newport Beach, Corona del Mar, Newport Coast.
Tuesday, November 13, 2018
NOVEMBER 2018 ORANGE COUNTY REAL ESTATE NEWS
HORTON TEAM REAL ESTATE NEWSLETTER
WHY BUYERS NEED TO HURRY
Source: Realtor.com October 24, 2018
While there have been signs recently that the market may be shifting toward the favor of home buyers, prices are still on the rise in many areas around the country. The median sales price in July is up 6% nationwide, year over year. But if buyers are hoping to wait it out, keep in mind that mortgage rates are increasing. The typical mortgage payment jumped over 13% in the past year, a result of a 0.6 percentage point increase in mortgage rates, according to CoreLogic, a real estate research firm.
Mortgage rates are expected to keep rising, too. CoreLogic predicts a further 10% increase in buyer's mortgage payments by next July, rising by twice the expected rate for home prices. Rates are expected to increase by about 0.43 percentage points between this year and next, while prices are predicted to only rise by 1.8% over the same period.
Based on these projections, CoreLogic researchers predict the inflation-adjusted typical monthly mortgage payment to rise from $937 in July 2018 to $1,003 by July 2019. Furthermore, real disposable income is expected to increase by only around 2.5 percent over the next year. That means “home buyers would see a larger chunk of their incomes devoted to mortgage payments,” CoreLogic researchers note.
While mortgage payments are on the rise, they’re still low by historical standards, CoreLogic researchers note. In July 2018, the typical inflation-adjusted mortgage payment still remained 26.8 percent below the all-time peak of $1,280 in July 2006. The average mortgage rate in June 2006 was 6.7 percent compared to 4.5 percent in July 2018.
With mortgages expected to rise, it is important for buyers to note that their buying power will continue to decrease.
A home that costs $1.5m bought today with approximately 20% down would have a mortgage of approximately $6,150. If purchased a year from today at the same price, that same home is expected to have a monthly payment of $6,500.
The difference comes out to an approximate $350 a month, or $4,200 a year.
With rate increases expected to outpace home price decline, now is a great time to start your home search.