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Interest rates have finally started to rise. In fact, for the first time since last summer, they’ve climbed higher than 4% for a 30-year fixed mortgage. Today, they’re at 4.5% for most of the lenders we work with.
We’re in for quite a competitive stretch in the housing market. By the end of last year, we had fewer than 1,000 active listings here in Dane County. Right now, we have 848 condos and single family homes for sale without accepted offers. This is 1.25 months of inventory. Since a normal supply of inventory is around six months, this means our market is moving pretty rapidly.
Although rates are rising, 4.5% is historically still a super low rate. It just seems higher because it’s followed a long period of time where we saw near record-low rates. This rise isn’t expected to be just a blip, either. Len Kiefer, the chief economist for Freddie Mac, thinks we’ve seen the last of the sub-4% rates for quite some time due to strengthening inflation and a growing economy.
Secondly, the demand for mortgage applications increased 4.1% this past January compared to January 2017.
Third, as I stated above, the housing supply is becoming increasingly tight. At the end of 2017, there 17% fewer homes available than there were at the end of the previous year.
What does this mean for you?
The growth in mortgage rates shouldn’t affect the number of eager homebuyers out there because demand is exceeding the supply. In other words, there are ways too many buyers for too few houses, and we’re expecting that trend to continue.
If you’re looking to buy, should you worry about the rise in interest rates? Not necessarily. The biggest limiting factor will still be the number of homes available. Fortunately, as we enter into the spring season, more homes will hit the market.
If you’re looking to sell, there’s probably never been a better time in recent history to get top dollar for your home.
If you have any further questions about our market or you’re thinking about buying or selling a home, don’t hesitate to reach out to me. I’d be happy to help you.