Tuesday, 20 February 2007
Kathy Henne Editorial
The Kathy Henne Team
Check The History Books!
Bubble, bubble, toil and trouble! There's no doubt that the real estate marketplace is settling down from its breakneck pace of the last few years. There's also speculation that the real estate "bubble" is going to burst, but it's nearer the truth to say that the most overheated markets are losing steam, while other markets are reasonably re-adjusting.
The biggest worry swirling around the whole issue relates to mortgage interest rates, and whether we're looking at 7% rates on the horizon. Before anyone begins to panic, however, it's useful to reflect on history. During the last thirty-four years, interest rates were lower only four times. To review, rates were 6.79% in 1998, 5.92% in 2003, and 5.71% in 2004 and again in 2005.
The average interest rate in the 1990's was 9.8%, and in the 1980's it averaged 12.62%. Some of us purchased homes in the early 1980's when the interest rate was 18%. Some lucky purchasers were able to assume FHA or VA loans at 10% and were thrilled at the "bargain interest rate" they were able to get. Double-digit loan rates were common in the seventies and eighties. It should be pretty clear by now that real estate markets everywhere will find a way to survive interest rates rising into the 7% range.
There will always be buyers who will want and need to buy a home in every real estate market. Buyers will still compete for homes, if those homes are in great condition, listed at a fair price and marketed to their best advantage. The sellers who have their homes pre-inspected will entice the best buyers because those buyers don't want to miss out on this great "buyer's market" by being tied up with a home that may have unknown mechanical or structural issues. Consult your professional real estate agent to outline your no-nonsense approach to selling your home in this cooling market. You'll save time, hassle and money.