I have been in the housing business so long that I’ve been through several outgoing, 2 term presidents, where their party was in control of both houses. Typically, at the beginning of the election year, interest rates and gas prices begin to rise. They peak during 3rd. quarter and begin to improve toward the national election in November. (Watch, as soon as I say this, we’ll see an aberration in 2016.)
However, this article may well be a signal that the trend will repeat itself in the coming months.
Prospective homeowners would be wise to buy their home as soon as they can. Sales prices in the South County (San Jose, Morgan Hill, Gilroy, Hollister, San Juan Bautista, CA) begin to rise more rapidly at the end of March and peak in July. The interest rates will probably inch their way upward during this same time frame.
And look at the impact of a 1.0% rise in interest rates*: A $400,000 home with 10% down to a new, $360,000 30 yr. fixed rate loan will see a $214 higher monthly principle and interest; a corresponding increase in the qualifying income needed by $642/mth. The closing costs will also be slightly impacted.
If you are thinking of buying a home, now will be the lease expensive time for South County homes for the next year or more.
*4.0% to 5.0%