January 2021- Issue 41

Okay, so 2021 started out a little rough.

But the housing market is still strong, both for existing homes and new construction.

This month, we’ll take a look at why it’s a great time to buy – or sell – a home.

No matter what else is going on in the world, everything will look a little better if you

Love Where You Live!

xo-

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When it comes to the real estate market, prognosticators abound.

One of the best places to go for general information about the national market is the National Association of Realtors news page, which you can find HERE.

But it seems that real estate news is a hot item these days. It’s everywhere.

The overriding theme is that even though it has not been immune from the pandemic, the market is strong and likely will continue to be so through the next year. And we happen to live in one of the best areas of the country.

Dallas-Fort Worth is one of 10 markets that NAR spotlighted as showing resilience during and being likely to perform well after the pandemic.

Yes, I know: anyone who lives in Texas will tell you that Dallas and Fort Worth are very different places with distinct real estate markets. And that's not to mention the Mid-Cities, an altogether dissimilar area between the two.

Be that as it may, considering the economic forces exerting pressure on residential real estate – supply, interest rates, employment, and the like – it’s fair to combine north-central Texas into a single unit for crystal-ball gazing.

Supply is still low, which translates to a seller’s market, even with the increase in new home construction.

Speaking of being “still low,” interest rates are at levels that allow a buyer to get more for their money now than at any time in the last several decades.

And even though those two factors have combined to push sales prices upward, the DFW inventory is still affordable, particularly when comparing it to places like Phoenix and Seattle, where price jumps are approaching 10%.

Interest Rates Give You More Purchasing Power

I shared a bit about interest rates back in December. If you missed that issue, you can see it HERE. Another way to look at the effect rates have on homeownership is to look at what the same money buys you at different rates.

Let’s say that you have around $1000 per month that you can comfortably allocate to paying principal and interest on a home.

Now, let’s see what that money can buy you at different rates, assuming 20% down and a 30-year fixed mortgage.

P&I pmt  Int Rate Home Price

$1007       4.25         $255,945

$1009       4.0           $264,424

$1010       3.5           $281,382

$1006       3.0           $298,341

$1002       2.75         $306,820

As you can see, a point-and-a-half decrease in the interest rate at the level of a $1,000 per month P&I payment allows you to buy a property worth $50k more.

If you’re able to allocate more to your monthly payment, the disparity is even more striking:

P&I pmt  Int Rate  Home Price

$2008       4.25        $510,323

$1997       4.0          $523,041

$2000       3.5          $556,959

$2007       3.0          $595,115

$1998       2.75        $612,074

That point-and-a-half reduction in interest rate buys you a hundred thousand dollars more house at the same payment.

This morning, I did a bit of online interest rate shopping for a 30-year fixed loan. I found that I could beat the 2.75 rate several places, some with no points.

It’s an excellent time to buy. And it’s a great time to sell.

I’m not necessarily recommending that you consider a bigger home, although economic considerations certainly make that possible.

It could well be that shifting into a cozier, more compact space will make you more comfortable.

I believe it’s essential for people to love where they live. The happier you are with your surroundings, the happier you’re going to be with your life.

Because of market conditions and timing, I’m suggesting – I’m urging that you take stock and decide if a new living adventure is a way to increase your contentment quotient. You have options you might not have considered.

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You can - and should - love where you live!

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