Now’s the Time! A Uniquely Favorable Market — For Both Buyers and Sellers

By Elizabeth Kohen | March 10, 2017

Now’s the Time! A Uniquely Favorable Market
For Both Buyers and Sellers

We’re in the midst of a rare moment in real estate, in which it’s simultaneously an optimal time to sell and to buy. Rates started inching upwards after the election and are expected to continue to rise.

Since the election, rates have increased by .375% to .50%—an increase of $21-28 per month per $100K of mortgage. The Fed met most recently on March 15th and raised the funds rate by 25 basis points—but there are many economic factors that contribute to mortgage rate movement, and some of Wednesday’s expected rise was already priced into mortgage rates, so rates themselves have barely adjusted since then. So far, the impact on the market overall post-election has been minimal, but as rates climb upwards, what could this mean for you as both a buyer and a seller?

As a buyer:

On a $500K mortgage, with a 30-year fixed rate loan, payments have gone from $2,245 to $2,351 (on average), a monthly increase of $106.

On a $1M mortgage, with a 30-year fixed rate loan, payments have gone from $4,490 to $4,702 (on average), a monthly increase of $212.

While we don’t have a crystal ball to predict where rates will land in the future, current economic trends, coupled with the Fed’s clear objective to raise rates, and the projections of top economists, all point in the direction of further incremental increases. As rates go up, banks try to find ways to pass their higher borrowing costs along to purchasers. Rate increases might eventually lead to a leveling or plateau in overall sales prices, but in our experience, through economic downturns, it’s unlikely to lead to a significant price drop in our area. We recommend buying sooner than later to get more “home” for your money.

Here is a breakdown of payment differentials at varying interest rates on a $100,000 mortgage:

3.25% = $435.21
3.375% = $442.10
3.5% = $449.04
3.625% = $456.05
3.75% = $463.12
3.875% = $470.24
4% = $477.42

What does this mean for you as a seller?

Brooklyn continues to be a strong seller’s market. Inventory remains low, and buyers are trying to take advantage of what are still historically low interest rates, so there’s ample competition for any given property. As a seller, you want the largest pool of buyer candidates to vie for your listing; as rates increase, there will be fewer buyers in the market. Thus, selling while there are still a number of strong, active buyer candidates is highly advisable.

Our listings tend to generate, on average, 5-10 bids within a week or two on the market, almost always above the asking price. The only downside in this market from a seller’s perspective is that we advise pricing your home competitively on the cusp of the market, rather than aggressively. If priced too aggressively, you’ll start to see a decline in eager buyers willing to view your home. The longer a property sits on the open market, the less interest it will generate. Buyers will sense there is something wrong or unappealing about it if nobody else has expressed interest. It’s human nature to want what other people want, and real estate is often a reflection of ourselves. People want their homes to convey their social standing and to be appreciated by others.

If priced appropriately and staged/marketed effectively, which we pride ourselves on doing at the top of our field, a property should generate a significant amount of interest within the first 10 days on the market.

Please give us a call at 718-622-7600 if you’re considering buying or selling real estate in Brooklyn, and we can walk you through the process. Spring is typically peak sales season, and we believe in careful pre-market preparation prior to hitting the market, so now is the ideal time to talk.

One of our preferred local lenders, Yossi Notik from Chase, is remarkably astute, reliable and enormously helpful. Contact him today at 917-572-2124 for expert advice about securing a mortgage or refinancing.


         
                  
         
                  
         
        
         
         
                  
         
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