In June, the Federal Reserve raised interest rates to slow inflation. If you plan to buy or sell a home, you may wonder how this will affect your real estate goals.
Mortgage rates are not based directly on this rate but are the mortgage industry’s yield prediction for the US Treasury Bond 10-year note. Mortgage rates have also increased, from 3.22% (30-year fixed) the first week of January to 6%.
Mortgage rates are still historically low, with July 2020 being the first time in history with rates below 3%. Over the 51 years since Freddie Mac started keeping mortgage rate records, the overall average rate for a 30-year fixed mortgage is 7.77%. The average annual rate was above 10% for all of 1979-1990, with the highest average rate being 16.63% in 1982.
During the last 10 years buyers have enjoyed annual average rates between 4.54% in 2018 and a record low of 2.96% in 2021 How does the current increase affect your home buying or selling journey?
Rising interest rates affect the buyer in that it:
This affects the seller in that it creates:
While only one factor affects the Real Estate market, rising mortgage rates are often an indicator of strength in some other factors, including stronger economic growth, lower unemployment, and better wages.
How are these factors playing out in the Rio Grande Valley? In June, the Texas Real Estate Research Center at Texas A&M released a report of April’s economic indicators for the Texas-Mexico border regions. In the Rio Grande Valley, indicators were reported for McAllen and Brownsville. The report shows that the Rio Grande Valley Real Estate market is still strong, partly due to job growth in the region.
While housing sales in April decreased from the previous month by 1% in McAllen and by 0.1% in Brownsville, both metro areas boasted an increase in median home prices. We continue to be in a seller’s market with home inventories rising to 2.1 months of inventory in McAllen and 1.6 months of inventory in Brownsville. A balanced market typically has about 6 months of inventory. Both metros saw an increase in the number of days on market, though it is still lower than April 2021.
The Brandon and Audrey Team are available to help guide you in the buying or selling process and help you navigate the changes in the market. If you are planning a move into or within the Rio Grande Valley, let us help you find the perfect home or sell your current home.
Links to websites used for data: