Austin Home Prices & Interest Rates Going Up?

Market Update with Kenn Renner and Kenton Brown - Austin Home Prices & Interest Rates Going Up?

Transcript:
Kenn Renner:
We talked a little bit about you cant really see the timing when it comes to real estate. You only see the turn, and thats actually when you have to jump in and get in and get our buyers to get off the shelf.

Kenton Brown:
Well, and speaking of market timing, its kind of interesting because the graph kind of looks like a smiley face with a line through it. People never actually know that its turned until after the fact. Its historical. So I looked at some analysis just out of curiosity. Since rates have gone up a half to three quarter percent recently, I started to look at how that affected buying power. Every half percent represented somewhere between $7,500 and $8,000 of buying power on a $150,000 house, which is what I used as a benchmark because thats the typical price range for a first time homebuyer. So when you start to look at where rates were just as recent as November of last year, rates were about 6.25% to 6.5%. So each percent in rate is representing roughly $13,000 to $15,000 of buying power. I think people are starting to see that rates arent going to 4% any more because the mechanics arent there and theres only a certain amount of demand in mortgage backed securities, which is what is driving the lower rates. So were in a perfect situation right now where rates are tremendously low at 5.25% to 5.5%. Theres still a good amount of inventory out there that first time homebuyers can take advantage of. Even move up buyers from that respect. The third thing is this $8000 gift from the government just basically goes right into their bank account. Its a phenomenal situation

Kenn Renner:
One of the neat things that were talking about is that the move up market, say between $200,000 and $300,000 is not seeing that same moving towards the sellers market. So if youre getting out of selling your first home in a sellers market, you should get maximum dollar return on it and youre moving into a market thats still recovering and is still a buyers market, the difference is that youll get an incredible jump in equity when you move to that higher property. This is because the higher properties are still competing for the same buyers. So as people come out of their first time home and move to their move up, I think youre going to see people really improving their equity situation by taking that route.

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