It wasn’t long ago that I bought a home with a VA mortgage at nearly 5%. I subsequently refinanced that mortgage down to 3.2%. I just sold that home. The buyer got a new VA mortgage at 2.2%.
So, what is the impact of interest rates? Say a buyer can qualify for a mortgage of $300,000 at 5%. That is a loan payment of $1,603/month. If the buyer still qualifies for a $1,603 payment but the rates go down to 2.2%, they can now borrow $423,000. This increased buying power is a huge driver to the market!
The second driver here in Asheville is scarce inventory. Buying has tremendously outpaced construction. As they say, “Slim Pickens.” I am currently working with a “cash” buyer trying to purchase a home for her daughter. She has submitted 3 offers, two at list price and one $5,000 above list price. We have yet to get her under contract. A few days ago, late in the afternoon, we called on a new listing, first day on the market. There were already 13 offers in hand; we didn’t bother submitting.
I have worked in ‘Buyer’s Markets.” I have worked in “Seller’s Markets.” I have worked in healthy “Balanced Markets.” I have worked in “No One’s Markets.” It’s been a roller coaster ride over the years.
Wherever you are in the market, “This too shall pass.”