NOTES FROM DB

By Daniel J. Bollinger

INTEREST RATES

The talk of the town these days is interest rates. They are on the rise and all data points to a continued increase throughout the year. The best way to play this is to buy a pre-development. You get a “double bang for your buck” in this situation. When buying into pre-development, you enter into a contract on a unit but don’t have to close until project completion. You can also obtain a mortgage once in contract. Pre-development prices increase closer to project completion. So not only are you saving money by buying a pre-development unit when the prices are lower, but you are also saving on your mortgage. That is the “double bang for your buck,” saving on both pre-development pricing and lower mortgage rates. Citizen’s Bank has a great “lock and shop” product. You can get pre-approved for a mortgage and “lock” into an interest rate at the same time.

I have been speaking to industry leaders, and they are all confirming this. Allen Shayanfekr of Sharestates says, “We are definitely seeing rising interest rates since markets are up, the Fed has to increase interest rates to compete with that (the stock market).” He also says, “there is a huge value-add in locking in interest rates.”

Mark Ferguson of Investformore.com agrees and says, “This is a good time to buy, rates are as low as they’re going to be for now and I can’t see them going any lower, especially with the current stock market activity.”

Ben Shaoul of Magnum Real Estate Group says, “With recent increases in interest rates and projected additional increases in the future, our advice to purchasers is to enter into contracts to purchase real estate now with the current, low rates.”

HOW RISING INTEREST RATES AFFECT BUYER/SELLER

Buyer
• A 1 percent rise in rates = 11 percent drop in purchasing power for a buyer.
• As rates rise and buyer’s maximum purchase price falls, buyers find they can’t afford as much “home” as they once could.
• As you can see above, as buyers move to higher purchase prices, their effective purchase amount that is reduced by rising rates is quite significant. Therefore, it is a good time to buy before interest rates increase more.

Seller
• If rates are already at low levels (which they are), buyers will usually be influenced to spend more to take advantage of good financing terms.
• While this rise in rates benefits the lender, it forces the seller to lower their prices.
• As you can see, it is better to list your home sooner rather than later. As buyers lose purchasing power they rarely downgrade, usually they will instead wait until prices drop and/or interest rates drop. Therefore, it is a good time to list your home now before rates go up even more.

The year 2017 is going to be a very interesting year in real estate. The stock market trending positively and reaching new historic heights shows confidence in the system. Interest rates will have to trend up as well. All of this suggests that now is a great time to buy or sell your property to stay ahead of the curve.



Daniel Bollinger
Licensed Real Estate Salesperson
Halstead Real Estate
DanielJBollinger@Yahoo.com
Luxury NYC Real Estate Expert

Advertisement - Outer BAnks Vacation Rentals - https://www.joelambjr.com/
Advertisement - Daniel J Bollinger - https://www.halstead.com/real-estate-agent/daniel-bollinger
Advertisement - NYAMB Conference & Trade Show - http://www.nyamb.org/wholesale-conference2017
Advertisement - Select Sotheby's - SELECTSOTHEBYSREALTY.COM
Advertisement - Select Sotheby's - SELECTSOTHEBYSREALTY.COM