Vikki Goodwin’s Austin Real Estate Weblog

About a week ago, I heard on NPR a new proposal to bring mortgage interest rates down to 4.5%.  My husband did some research and found that the group making the proposal is the Home Builders Association, and they are asking for these rates for new construction homes.  That won’t go over well with all the homeowners and Realtors trying to sell their resale homes, nor with banks needing to get foreclosed homes off their books, nor with mortgage brokers who are excluded from the new construction market due to the home builders owning their own mortgage companies.  The only people that legislation would be good for are the home builders!

Recently the National Association of Realtors sent me a survey asking if the proposed new rates were enticing buyers to buy homes.  What a silly question.  If a buyer thinks he/she has a chance of getting a mortgage in a few months at an all time low rate of 4.5%, why buy now?  The effect of the announcement on NPR was detrimental to the real estate market – because now buyers have yet another reason to sit on the fence – waiting for prices to reach rock bottom, and now also waiting for interest rates to hit rock bottom.  What needs to happen is for someone in the federal government to make and announce a final decision as to whether or not they plan to pass legislation that would force interest rates down to 4.5% and if so, when. 

In the meantime, interest rates really are at an all time low for fixed rate loans.  Previously a buyer had to get into an adjustable rate mortgage to get a 5% or lower rate, while now you can get a fixed rate mortgage at or slightly above 5% with good credit and depending on what day or time you lock your rate, maybe a point or two paid.  And while prices might go lower still than they are now, that’s not a given in the Austin area.  We are still seeing many people moving here from other places, and with our economy remaining better than many other cities, I don’t see that changing.  Springtime is always a better time to sell, since more people are out buying, and prices tend to go up slightly in the Spring when there’s more demand. 

What all this means is that NOW is an excellent time to buy… if you need to buy.  And if you have the luxury of being able to buy a home first, move out and then sell your existing home, the timing can’t be better.  Buy in January when prices are down and sellers are highly motivated, close in February, and list in March.  That’s the optimal situation.