Rising Interest Rates having an Affect on Market

The Big Question, What is happening to Our Real Estate Market? 

Over the Past Few Years Home Prices have been on the Rise.

Until June of this year when Interest Rates went to 5.81%

Since then Home Prices have been dropping.

 

 

In the past Year, Mortgage Interest Rates have Risen from 

2.77 % in August 2021 to 5.81% in June 2022.

Currently Rates are 5.22%

To emphasize what that means to Home Buyers, 

we will use an example of purchasing a Median Price Home in Henderson.

Current Median Home Price is $600,000

$600,000  -  Purchase Price

$120,000  -  20% Down Payment ( To Avoid Paying PMI )

$480,000  -  Loan Amount

 

With an Interest Rate of 2.75, the monthly payment would be $1,960 

With an Interest Rate of 5.75, the monthly payment would be $2,801 

This is Payment and Interest. ( Not Including Taxes, HOA and Insurance )

A difference of $841 a month.

 

This has a lot of Buyers taking a step back to wait and see what happens.

 

Some good things that are happening because of this are;

 - Home Prices are Dropping

- Inventory is Increasing

Picky Buyer, with more Inventory, you are more likely to find your Dream Home.

And when Interest Rates go back down, You can Refinance into your Dream Loan.

 

Call us if you have any questions. 

 

The 3 ( I )'s Affecting the Housing Market

 Inventory, Interest Rates & Inflation

So what's happening in the Real Estate Market?

The quick answer is that a Low Inventory of Homes is driving up Home Prices. 

Rising Interest rates are making Payments on these Homes Larger.

And Rising Inflation makes everything cost more leaving 

Buyers with less money to spend on Home Payments.

 

 

Since the Summer of 2019, 

Inventory of Available Listings has dropped from 5,500 to under 1,400.

In that same time Home Prices have Risen from $350,000 to almost $600,000

 

At the Beginning of 2022, Interest Rates were 3.11%

On a Median Home Price of $600,000

You would have a P&I Payment of  $2,565

Now at 5.3% that Payment would be $3,332

$767 more every month.

The Median Household Income for Nevada is under $100,000

Inflation is currently at 8.5%. This means that all the items you 

spend money on cost 8.5% more than they did one year ago.

In 2021, Inflation was 7 %. That means that all the items you 

spend money on cost 15.5% more than they did two years ago.

To Summarize, if you had purchased a Median Home in 2019, 

when everyone was predicting a Housing Slump caused by Covid Crisis, 

and a Median Home Price was $350,000 and Interest Rates were 3%.

You would have a Mortgage Payment near $1,475.

Now with Inflation being more than 15% Higher than back then.

You can buy a Median Home for $600,000 with an Interest rate of 5.25%

And Pay a Monthly Mortgage payment of $3,313

 

Are these Prices Sustainable?

Time will tell...

Higher Home Prices - It's All about Your Perspective...

The Big Question these days is,

"How can we Sustain these High Home Prices?"

To us here in Clark County, these Prices seem "Crazy"

In the past Year the Median Home Price have gone up,

Henderson 24%

Las Vegas 42%

N Las Vegas 66%

Who is paying these Astronomical Prices? 

The Californian's... Of course!

 

From there perspective, Las Vegas Prices are Incredibly Affordable.

Scroll down and you will see the Median Sales Prices for 

the 4 of the Largest Cities in California.

Looking at these numbers, California's Median Prices have either 

dropped or stayed almost the same over the same period.

Now that people can work from Home,

it makes sense to Live in a more affordable and more fun location.