Monday, June 24, 2013

Rising mortgage interest rates and home sellers and buyers - what it means

By now, you've probably heard that mortgage interest rates are rising and may go up as high as ('gasp') 5% by the end of the year.  That's still historically very low, but here's how it will affect you.

If you are selling your home in Burbank, Studio City, Toluca Lake, Sherman Oaks or any other place in our region, rising rates will have a dampening effect on activity.  Some buyers will be knocked out of the market and that should "stabilize" prices a little bit.  Higher interest rates usually exert a downward pressure on prices.  That doesn't mean that you won't get multiple offers for your home if it's priced right; it just means that there may be less offers than we've been experiencing. The offers may not be quite as high, either, especially if home inventory increases. However, your home will sell if it's priced right and marketed correctly.  (See the marketing page on my website at JudyGraff.com.)

If you're a home buyer in the San Fernando Valley, all of the above will be good news for you except the interest rate part.  Yes, it will cost you more to buy a home.  But you won't have as much competition (some of my Valley home buyers wrote eight to ten offers before getting one accepted) and prices won't be rising as much.  And if inventory increases, that will have a downward effect on prices.  So keep looking.  Your house is out there.

If you're a buyer and you're currently in escrow, make sure your lender locks in your interest rate.

Caveat: some of the neighborhoods here in the Southland are immune to the effects of rising rates.  The really, really expensive high-end L.A. markets are still awash in cash, with a lot of that coming from overseas.

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