11/18/2016

 

Last week – I wrote with my heart on my sleeve.

Today, I have my realtor hat on, and I’m looking into my crystal ball...

 

 

Trump was elected president.    In the ensuing week, mortgage rates went up one-half a point.  Roughly from 3.5 to 4.

 

If your wealth is tied to stocks – then generally speaking, things are good for you.   Stocks are up, bonds are down.  

 

As I heard it said: 

 

If you’re already rich – now you are richer.  If you are not rich, now you’re less rich.

 

Another result of the election, relative to markets, is this:  There is now more “uncertainty” about things.     And when people are “uncertain” - - What they do is “Nothing.”  

Confidence Begets Action.  

 

RELATIVE TO REAL ESTATE:

 

The cost to borrow has gone up – and it will in all likelihood stay up. 

The days of the under-4.0 mortgage rates are gone.

 

Buyer’s buying power has gone down - - and thus  -- nationwide - home prices will go down.  And the Uncertainty in the Market is also likely to slow the housing market in the short term – Less buyer money, less homes selling.

 

Will prices in our area go down?   Perhaps.  The fact is, to be able to afford to buy in Linden Hills, Fulton, Lynnhurst, and most of Southwest Minneapolis, one needs to be, shall we say:  among the economically fortunate.

 

Mortgage rates have jumped one-half point; buyers have lost buying power, and thus, sellers may lose market value because certain buyers can no longer pay as much for a house as before... This jump of ½ point in the mortgage rate means that if you are buying in the 350-450 range, your payments just went up 100 dollars per month.  Or – put another way – if your buyers can afford $1800 per month, they can now get a $400,000 mortgage.    They used to be able to get one for $425,000.

Whether this affects YOUR home value depends on how much your buyer's buyer power is related to income, and how much is related to assets/personal wealth.

 

My Main Takeaway -- viewing my crystal ball from here:

The big spring we were expecting may not be quite as big – except perhaps in the much higher price ranges – where again, those with wealth -- now have more.

 

 

I’d love a conversation about this – please write or call if you’d like to chat.

Larry LaVercombe

   Realtor

and

   Publisher of Linden-Hills.com

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