In case you haven't heard…

 

 

Great news for buyers…The zero down loan (USDA -rural development) that many buyers qualify for and are using to purchase has been extended in the Lynden area for eligibility until at least Sept 30, 2014.

As you may have heard, the Federal Open Market Committee and Federal Reserve Chairman Ben Bernanke announced a change to their current bond buying program today.  Prior to this announcement the FED had been purchasing $85 Billion worth of US Treasuries and Mortgage Backed Securities every month.  The announcement today indicates a reduction or “taper” of that purchasing structure by $10 Billion per month.  This DOES NOT mean that the FED will STOP subsidizing rates anytime soon, but it does signal an intention to wind down the support program over time.  Rates have moved up about .25% over the last couple of weeks in anticipation of such a move so the immediate impact to rates should not be overly negative from here.  That being said, we should expect higher mortgage rates in 2014 as the economy continues to improve.  Fannie Mae and Freddie Mac have also announced increases to their delivery fee to lenders effective in April of 2014.  That will cause a rate increase of around 0.14.  Due to all of these factors, many economists are targeting a 30yr fixed conventional rate of 5.25% – 5.5% by the end of 2014.   NOW is a great time to buy.

 

Remember that a 1% increase in loan rate reduces purchasing power by 10%.  Add that to an expected 10% increase in home prices in the coming year and you have a very compelling reason NOT to wait.

 

Today’s Conventional 30 year fixed rate  =   4.5%

                FHA/VA  30 year fixed rate  =  4.125%

Well the good news is that for most of Whatcom County, property owners are seeing home values increase and more homes sold than a year ago. Overall the county is realizing an average sales price of 3.5% higher than last year and 15% more homes sold than a year ago. But that's not true for all cities/towns in the county. While Blaine and Bellingham have seen some tremendous improvements (20% higher than a year ago), places like Lynden and Nooksack are down (as much as 15%). Click on the link below to see a comparison chart.

Market Comparison 1.13 to 10.13

 

If you want a free home evaluation of your property please let me know if I can help.

Want to know what your odds are of selling your home in Whatcom County? Want to know what your odds are if using Windermere Real Estate? Click here to find out: Odds of Selling Home Aug2013

Today’s Rates are:

 

30 Yr Fixed 4.375 no points  

15 Yr Fixed 3.375 no points 

Jumbo 30 Yr Fixed (25%down) 4.875 no points  

FHA/VA 3.875 .625 points 

Investment 30 Yr Fixed (25%down) 4.875 .25 points

Below is an interesting article recently posted on Forbes.com regarding purchasing being cheaper than renting.

Until Mortgage Rates Hit 10.5%, Buying a Home Will Still Be Cheaper

Than Renting

By

Jed Kolko, Trulia Chief Economist | 6.14.13

The recent rise in

 

mortgage rates has made buying a house a little more expensive: the increase in the 30-year fixed

rate over the past month from 3.4% to 3.9% (Freddie Mac) raised the monthly payment on a $200,000 mortgage by

$56, or 6%. However, because mortgage rates are still near long-term lows, and because prices fell so much after the

housing bubble burst and remain low relative to rents even after recent price increases, buying is still much cheaper

than

 

renting. That means that the recent jump in rates doesn’t change the rent-versus-buy math much.

Rates are likely to keep rising, but how far must rates rise before buying a home starts to look expensive relative to

renting? To answer this, we updated our

 

Rent vs. Buy analysis with the latest asking prices and rents from March,

April, and May 2013. Following our standard approach, we calculated the cost of buying and renting for identical sets

of properties, including maintenance, insurance, taxes, closing costs, down payment, sales proceeds, and, of course,

the monthly mortgage payment on a

 

30-year fixed-rate loan with 20% down and monthly rent. We assume people

will stay in their homes for 7 years, deduct their mortgage interest and property tax payments at the 25% tax bracket,

and get modest home price appreciation (see the detailed methodology and example

 

here). Here’s what we found:

Buying remains cheaper than renting so long as

 

mortgage rates are below 10.5%. At 3.9%, the current 30-year fixed

rate according to Freddie Mac, buying is 41% cheaper than renting nationally. With a 5% mortgage rate, buying is still

34% cheaper than renting nationally. Mortgage rates would have to rise a huge amount – to 10.5% – to tip the math

in favor of

 

renting, which isn’t impossible. Rates were that high throughout the 1980s, but have been consistently

below 10.5% since May 1990.

Each local market, of course, has its own mortgage rate “tipping point” when renting becomes cheaper than buying a

home. At 3.9%, buying is cheaper than renting in all of the 100 largest metros, which means the tipping point is

above 3.9% everywhere. The tipping point is lowest in

 

San Jose, which would tip in favor of renting if rates reach

5.2%. It’s between 5% and 6% in

 

San Francisco and Honolulu, and between 6% and 7% in New York and Orange

County, CA.

But for 78 of the 100 largest metros, the tipping point is 10% or higher. In fact the tipping point is above 20% in

Cleveland

, Memphis, Detroit, and several other metros in the Midwest and South.

Of course, the tipping point also depends on how long you plan to stay in your next home (we assume 7 years) and

whether you itemize your deductions (we assume you do). For instance, if you don’t itemize, or if the mortgage

interest and property tax deductions were eliminated entirely, buying would still be 29% cheaper than renting at a

mortgage rate

of 3.9%, and the tipping point when renting becomes cheaper than buying would be 7.5%.

But just because buying is cheaper than renting, it doesn’t mean you can buy. Lots of people who want to buy don’t

have the downpayment or can’t get a

 

mortgage. Even people who can swing it financially might not be able to buy

right away, before rates rise further, because they might not find the home they want quickly with inventory still so

tight.

So if the recent increase in mortgage rates doesn’t change the rent-versus-buy equation substantially, why does it

matter? The main effect is to reduce the demand for

 

refinancing. Unlike homebuying, refinancing is a relatively

straightforward financial decision: although refinancing has upfront costs, refinancing doesn’t require

 

finding a

home

, thinking hard about your lifestyle, or moving. Since rates have been low for so long, many people who were

able to refinance, already have. As a result, the demand for refinancing is now dropping.

For people who haven’t yet refinanced – and for people looking to buy – rising rates do make housing more

expensive. Rates are now on the rise and are likely to keep rising, thanks to the strengthening economy and the Fed

eventually trying less hard to keep rates low. But it will take big rate increases to turn off prospective homebuyers. At

today’s prices and rents, rates would have to rise to levels we haven’t seen in 20 years before renting is cheaper than

buying a home

on average across the country.

Source: www.forbes.com

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