By Carl Fischer
For some time now, I have reported specific observations that have lead me to believe that our local residential housing market is “bottoming out”. And I have no reason at present to believe that trend in not continuing. But every erratic day on the S&P or DOW sends reverberations down my spine. And it drives buyers back into a fetal position bracing themselves for “what comes next”.
It’s not that a majority of our neighbors are necessarily heavily invested in the the stock market, but I think a very high percentage see these indicators as bellwethers for a larger trend in the regional and national economy. And we’ve all been so numbed by this seemingly endless “Great Recession”, that any observation whatever of present uncertainty feels like an aftershock to a bad earthquake, amplified by our worst fears.
And that perception breeds paralysis in our willingness to make any changes whatever of an economic nature. So buying or selling of real estate, for the moment, seems unwise.
The present facts don’t necessarily support those feelings, but most of us act on instinct more than facts.
One fact is: mortgage rates continue to decline. Just when you thought rates could not possibly go lower, we learn that they not only can; they do. On May 31, 2012, Bankrate Inc reported: This week brought yet another record low in mortgage rates, with the average 30-year fixed mortgage rate falling to the record low of 3.94 percent according to Bankrate.com’s weekly national survey. The average 30-year fixed mortgage has an average of 0.46 discount and origination points.
The average 15-year fixed mortgage rate inched lower to a new record of 3.15 percent as did the jumbo 30-year fixed mortgage, sliding to the record low of 4.50 percent. Adjustable mortgage rates were both lower, as well this week, with the average 3-year adjustable dropping to 3.08 percent, while the popular 5-year ARM dipped lower to 3.01 percent.
The last time mortgage rates were above 6 percent was Nov. 2008. At the time, the average 30-year fixed rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 3.97 percent, the monthly payment for the same size loan would be $947.93, a difference of $294 per month for anyone refinancing now. (see www.yahoo.com for mortgage rates)
At a closing I attended a few days ago, my client remarked that since his rate lock two months ago on a below-four percent 30-year fixed loan, the rate had “floated down” yet another .02 percent, making his net interest payment seem too low to be real. It’s hard for me to overstate the incredible value to the consumer of such a low interest rate over the life of the loan.
And yet, there are still those too uncertain of the future to feel comfortable taking advantage of this once-in-a-lifetime opportunity to own a home at these historic low rates.
Another “flag” worth noting: residential building lots are now selling again
It has been nearly five years since I have witnessed ongoing lot sales in our area. Yet in the past three months, I have not only seen lookers, buth there have been actual closings that “made it to the table.”
When this phenomena began, I couldn’t help but wonder why; it was economically far more practical to buy a standing house at these unprecedented low prices than it was to buy a lot and build.
But week after week as I pounded the pavement with prospective home-buyers looking for the “perfect house”, it became abundantly clear: there were just very few under-$500,000 homes still left on the market right now. So what I’m hearing from those looking for lots right now is: “I can’t find what I want, so I’m just going to have to build….”
One high point for me this past month, was to complete a transaction for a very worthwhile organization out of Taunton, ME called “Homes For Our Troops” (www.homesforourtroops.org). They purchased a lot near Round Hill, and are building a home for a young soldier who is a double-amputee…. I heartily recommend that you go to their website and learn more about this proactive group dedicated to supporting our wounded soldiers.
Western Loudoun County is still the best place in the world to call home!
Carl Fischer is the Broker/Owner of United Country Real Estate, specializing in commercial, investment, and selected residential properties, as well as Northern Neck of Virginia waterfront homes. He is licensed in Virginia and West Virginia, and is a member of the Dulles Area Association of Realtor (DAAR) as well as the Northern Neck Association of Realtors (NNAR). To contact Carl, e-mail him at firstname.lastname@example.org.