On Wednesday the Federal Reserve raised its Fed Funds Rate for the first time in nine years, by .25%. After maintaining several years of historically low rates to stimulate the economy, the Fed now feels confident enough to begin a very gradual process for raising interest rates.
What does this mean for homeowners and homebuyers? Not much, at least in the short term.
If you are a homeowner with an adjustable-rate mortgage, and the Fed continues to raise its rates over the next few years, it means that whenever your next rate adjustment occurs, your interest rate (and your monthly payment) will likely go up based on your mortgage terms.
If you are a home buyer, this means that interest rates on mortgages may go up slightly, but not necessarily. The Fed Funds Rate is not directly linked to the interest rates banks charge on long-term home loans. Banks take into account many factors, including the Fed Funds Rate, long-term treasury securities, mortgage applicants' finances and credit, and what type of rates competing banks are offering. In general, there is no need to worry right now that interest rates for home loans are going to spike any time soon.
Keep in mind that mortgage rates are still at historic lows, and even if the Fed continues to raise interest rates, they will still remain remarkably low for many years. A recent article in the New York Times showed that from 1970 to 2007, the average interest rate in the United States was 7.3%. We are still nowhere near that, even if the Fed raises rates again.
For now, consult your realtor or financial advisor if you have any questions, but don't sweat today's rate hike.
Up, up, and up!
A new report out today from CoreLogic shows that Dallas area home prices were up 9.1% year-over-year in October, the largest increase of any area in the country. This just shows that demand remains strong and inventory remains low, so once again, it's a great time to be selling but an expensive time to be buying!
Of course the report is an average for Dallas as a whole, and Dallas is really big. All real estate is local, and price gains vary from neighborhood to neighborhood. This means some areas had very modest or low increases, while other hot areas, such as Richardson or East Dallas/Lakewood, probably had double-digit gains year over year.
A new report from Zillow shows that many individuals and families are still looking to buy homes as rental prices continue to increase.
Although rent increases have slowed somewhat lately, they're still going up here in Dallas. Part of that is that rents haven't kept pace with home values and demand, so many rents in our area are still a little below what would be appropriate for the market. But with more apartment buildings coming online, rent raises are slowing somewhat (or at least not increasing as quickly).
This means that for many renters, it might make more financial sense to purchase a house. But housing prices keep going up as well, and there's just not a lot to buy on the market right now! With fewer homes for sale and demand for both renting and homeownership at recent highs, it's hard to find a good deal.
Zillow ends its report on a somewhat somber note: "Despite this recent slowdown in rental appreciation, the rental affordability crisis we've been enduring for the past few years shows no signs of easing, especially as income growth remains weak. It will take a lot more supply, and a lot more renters-turned-homeowners, to fully reverse this trend."
You can read the full report here.
More than 500,000 people moved to Texas last year, continuing the influx of individuals looking for good jobs, reasonable real estate, and sunny weather.
According to statistics from the 2015 Texas Relocation Report, 538,572 people move to Texas in the year 2014 (although 435,000 moved away). But that means we still have more than 100,000 new residents thanks to our booming economy and low cost of living.
Dallas County welcomed more than 40,000 new people, and Tarrant County saw 37,000 individuals move into the area. This puts them just behind Harris County (Houston) and Bexar County (San Antonio) in the number of new residents.
Population growth continues to be one of the driving factors behind the demand for real estate. Most of the new residents are coming from California and Florida. Welcome to Texas, y'all!