If you’re a homeowner or a prospective homebuyer in Houston, understanding recent interest rate hikes can help you make the right decision for your home.
The Houston housing market ranks 2nd in the nation in real estate activity, with over 390,000 permits for single-family homes in the past ten years. However, rising interest rates mean the housing market may shift, necessitating a change in your buying or selling plans.
At Big State Construction, we understand the Houston-area housing market and can help you decide the right time to buy or sell your home. We can also provide insights for home buyers on the opportunity cost of waiting to buy a home versus buying and selling now. Also, if you have cash on hand, we can advise how to proceed.
Benefiting From Rising Rates
The United States hasn’t seen an interest rate hike like the recent increase in 22 years. To stem the current 8.3% inflation rate, the Federal Reserve recently lifted the minimum interest rate by half a percentage point, increasing interest between .75% to 1%. These rate increases will likely increase in the coming months and will shift the housing market, making it harder for buyers and sellers to achieve their goals.
Now may be the ideal time to put your property on the market, especially if you’re looking to avoid costly repairs piling up from recent storms in the area. Those thinking about relocating or adding to their retirement funds can benefit from the current circumstances by selling their home before further interest rate hikes.
Current Homeowners
Current homeowners can act quickly to lock in fixed rates for refinancing or home improvement loans. Favorable financing options present the opportunity to remodel or renovate a home rather than seeking a new one in a low inventory market.
However, the window of opportunity for securing favorable financing will not remain open for long. By some estimates, the Fed may raise rates several times during the current year for a total rate hike that may reach 3%. Acting now instead of waiting for 2023 can make a difference between a viable home addition and abandoning the idea.
New Homebuyers
A half a percentage point increase on a home mortgage can translate to tens of thousands of dollars in extra interest payments over the loan’s life. Buyers who need to borrow to buy a new home may find that rising mortgage rates leave them unable to make the purchase or can negatively impact the home’s long-term equity.
With mortgage interest rates rising, many prospective buyers will reassess their goals and possibly shy away from purchasing their desired home. On the other hand, as fewer buyers search for homes due to increasing rates, bidding wars will occur less often, leading to a more balanced housing market.
If you want to buy a home in the Houston housing market, act fast to establish a budget and secure a fixed loan rate before further rate hikes occur.
Cash Buyers
Consider remodeling your home if you have extra cash and want a change. Remodeling your home can offer benefits if you’re looking to sell soon. A few well-chosen renovations can help you boost your home’s value.
Remodeling can still be a wise investment even if you’re not planning to sell anytime soon. Updating your home can improve your family’s quality of life and make your home more comfortable and enjoyable.
Cash can offer flexibility with a downpayment under the current real estate market circumstances. Typically, a higher down payment lowers your monthly mortgage payments and allows you to negotiate better rates with your lender.
A down payment of 20% or more gives the bank security that you are a lower-risk borrower. Low-risk borrowers often receive a lower rate on their mortgage because the bank does not need to make up potential losses through interest fees.
Take Advantage of Rising Interest Rates With Big State Construction
As a current homeowner, securing a loan with a favorable fixed rate can provide the opportunity for a long-awaited residential remodel. Rising interest rates provide the perfect opportunity to act quickly for Houston-area homebuyers.
Big State Construction is a Houston-based construction and renovation company with over 13 years in the market. Our goal to restore Houston to its full potential involves helping home buyers and sellers take advantage of current industry trends and meet their real estate buying or selling goals.
Contact us today at (713) 574-8956 to learn how Big State Construction can advise you on which course of action is best for you regarding Houston-area home buying or selling.