Even though 30-year fixed rates dropped in the first half of January, many analysts expect fixed mortgage rates to go up somewhat in 2014, but to top out at around 5%. What this means for Santa Cruz County buyers is that while higher than 2013’s historic lows, the rates will remain favorable and predictable for home buyers.
What is less predictable is the potential rise in home prices. In fact, a Fannie Mae survey shows that more than 90% of the nation’s consumers believe that home prices are likely to rise and that potential buyers should start looking sooner rather than later. Here in Santa Cruz County, home values rose 20% last year and many consumers expect prices to rise in the coming months. One factor driving home prices up is the lack of available inventory. If inventory rises, prices may remain stable for awhile, giving buyers the opportunity to solidify their financial situation, set a budget, gather their down payment, double check their credit report and get preapproval for a loan. As prices have risen we see less investor/cash buyers, and first time home buyers have more choices.
Another potential driver of home prices is the cost of materials for new homes and remodels. The aftermath of disasters such as Superstorm Sandy and various wild fires has pushed the price of lumber up more than 5 percent overall last year. Labor cost increases due to changes in many state minimum wage laws and immigration rules, as well as rising insurance costs affect materials costs too. For sellers, this means placing your home on the market now has to potential to get it sold faster, and at a moderate price increase. As interest rates go up, however, prices will correspondingly come down to adjust to buyers’ debt-to-income ratio. To set the appropriate price on your home, work closely with your professional real estate agent.
Your neighborhood comparables and the “mood” of the housing market in your area, along with the input from your agent will help you determine the best price for your situation. Remember, the mood of the market includes more than the national reports tell you. Your market is made up of a combination of the local jobs report, home inventory, interest rates, local school popularity, which neighborhoods or home styles are trending, and the community’s perceived desirability of your address. Your professional agent stays abreast of this information and works with your to set the right price for your home.
Contact Hyko Roppel at 831-247-3803 for Santa Cruz County, Aptos, Capitola real estate and homes for sale.