By The Dream Digs Team, March 6, 2018
By Aaron Nawrocki, Capital M Lending
It’s been an exciting 2018 so far in the stock and bond markets. The broad indices are down over 10% from their peaks. Treasury Bond and mortgage rates are at a four-year high. It may be a good time not to look at your 401k statements, but what about the effect on home prices and the Portland housing market?
Higher interest rates make homes more costly, even if prices don’t rise. The higher cost of borrowing generally slows price increases. If we looked back over the last 20 years, we’d see a general correlation between rates rising and prices stalling. Mortgage interest rates are up about .5% over the last month, and for the average Portland homebuyer that means an increase in monthly payment of about $150. That’s enough to slow appreciation down somewhat and that’s exactly what the Fed hopes to accomplish with their rate increases.
Is it the second coming of 2009? Not likely. Interestingly enough, a moderate increase in borrowing cost can slow price increases, but rarely does it dramatically slow the market. Buying a home is a serious decision and typically the largest single financial transaction a family will make. Most buyers make the decision to buy a home based on their financial prospects and choose the price based on the monthly payment. So, interest rates don’t necessarily keep folks from buying, but they do affect the price they are willing to pay. We have a growing economy with a shrinking middle class (that’s a discussion for another day) and many Americans feel confident about their jobs and prospects. That confidence is what make buyers feel comfortable about buying homes (and is much more important than interest rates in the buying decision.) We learned this during the recession. Lower interest rates and lower mortgage payments don’t bring buyers in from the sidelines if they are worried about their jobs.
As the Fed works to smooth out and proactively dampen the economic cycle, watch for a brief slowdown while buyers and sellers receive and react to rates. Once the new normal for interest rates is accepted by the Portland housing market, it’s likely we’ll see buyers continue to enter the market. Portland is a desirable destination and still affordable for many potential homebuyers. We’ll see if the rate changes are a correction or a sign of things to come. For now we expect robust sales and a healthy market balanced between buyers and sellers.
Aaron Nawrocki has over 20 years of direct experience overseeing mortgage and loan processes, working to provide clients the market insight and lending expertise required to make informed decisions.
About Us:
Over the course of their professional partnership, Aryne + Dulcinea have helped over 200 clients prosper in their new lives. During this time, they have prided themselves in their top-notch selling abilities, with homes outperforming market standards, consistently exceeding list price while most of their listings sell in under 7 days. Whether you’re looking to buy or sell, Aryne & Dulcinea will work in collaboration to guide you in investing in your future and reaching your real estate goals.
THE DREAM DIGS TEAM
Aryne + Dulcinea, Earth Advantage Principal Broker | Earth Advantage Broker | ADU Specialists | OR
The Dream Digs Team are full-service, high-producing agents, who know how to navigate the unique challenges facing the Portland real estate market. The secret to their success lies in their professionalism and complementary skill sets. In 2012, Aryne + Dulcinea seized the opportunity to combine their creative and technical acumen to create a values-driven, client-driven team unlike any other. We are expert negotiators and project managers with a strong background in creative marketing. The Dream Digs Team are fierce advocates for our clients.
Our passion for real estate is connected to our commitment to the Portland way of life - a dedication to sustainability and appreciation for all things local. As Earth Advantage Brokers and ADU Certified Specialists, our team is savvy in all aspects of alternative living practices from versatile housing additions, green building practices, and revenue-generating strategies. Whether you’re looking to buy or sell, The Dream Digs Team will work in collaboration to guide you in investing in your future and reaching your real estate goals.
Dedicated to serving buyers and sellers with expertise, enthusiasm, and attention to detail, Aryne adeptly navigates the Portland real estate market. Licensed since 2005, she honors our clients' wants and needs using her sharp negotiating skills and professional know-how to achieve the best results for everyone she serves. Aryne loves the Pacific Northwest! Outside of work, she enjoys hanging out with her husband, listening to music, going on road trips, and talking about everything under the sun. She looks forward to visiting her grown-up kids at college and watching them succeed in all their endeavors. She loves yoga, hiking, dinner parties, podcasts, and embracing all that Portland offers.
Dulcinea thrives on working with clients with a range of real estate goals. Born and raised in Oregon, Dulcinea comes to real estate with a background in design and education. She is an award-winning professional and a steadfast advocate when working for our clients. She has a keen eye for preparing properties for listing and finding properties that best serve our buyers' objectives. Licensed since 2013, Dulcinea works in and around Portland. She is the mother of two and wife to her high school sweetie. In her free time, she stays busy with her family, traveling, creating community, cooking, gardening, making art, exploring, and dreaming big!
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