Marry Your Home, Date Your Rate – SiouxFalls.Business
October 10, 2022
This paid piece is sponsored by Amy Stockberger Real Estate.
By Amy Stockberger
Kyle Swiden of Plains Commerce Bank, one of our One Roof Solution and Home Support Team lending partners, introduced me to the saying, “Marry your home, date your rate,” and it immediately resonated.
My first home was purchased using a loan product that increased the rate over a specific period, ending at 6.25%. Although I loved this little house, we knew it wouldn’t be our forever home – in fact, it isn’t a house at all anymore because it was torn down and will probably be a forever parking lot in Sanford – and quickly refinanced at a lower interest rate once it showed up.
That first home was a fabulous, solid investment, but we only saw a 6% appreciation. Comparing that to the average sale price increase of 16.5% since the start of the year, according to September’s RASE housing market statistics, buying a house seems like a very smart financial decision. .
Pulsenomics just published the Housing Price Expectations Survey – a survey of a national panel of more than 100 economists, real estate experts and investment and market strategists. These experts predict an appreciation in house prices for the next few years.
The saying “Bad news travels fast, good news takes the scenic route” couldn’t be more relevant in recent years. You would be hard pressed not to have heard of the interest rate hikes.
Yes, interest rates have gone up, but house prices will also continue to rise. With Sioux Falls’ growth pattern, we likely won’t experience a housing oversupply anytime soon, even with the amount of new construction happening on nearly every side of the city.
Because of the smart leadership we’ve had in the past that currently provides so many opportunities for developers, large companies, and entrepreneurs, we could see at least 3,000 new jobs in our market over the next two years. Job creation creates supply and demand, which helps create wealth through real estate. My favorite things in this world are my faith, my family, and building a big, juicy legacy for our clients and our team.
This amazing short term rental opportunity at 4414 W. Shipton St. is an example. In a popular and convenient south side location, this townhouse is listed at $284,900 and is being sold turnkey, meaning all furniture, televisions, dishes, linens and small appliances are sold with the house . Turnkey to start renting it immediately.
Airbnb’s past history shows the house was rented out for up to $250 a night, meaning you could rent it less than 10 days a month to pay the mortgage – real estate wealth is at its best better.
As history has proven, when interest rates rise, creative loan products are created by lenders. Plains Commerce Bank has a new loan product it calls the 2-1 Buydown, where sellers can buy out the buyer’s mortgage rate up to 2%. And good old variable rate mortgages are becoming popular again, where the rate increases over a specific period of time. Again, marry off your home, set that price before it continues to rise, and date that rate – you can always refinance once rates have normalized.
It’s also worth mentioning something the national news doesn’t say: consumers are still paying and will continue to pay 8% or more on auto loans and 15% on credit card debt. These items generally depreciate and do not appreciate like real estate.
At the risk of sounding like a broken record, I cannot stress how important it is to understand that there is no such thing as a national real estate market. Home prices in New York do not affect the price of your home in Sioux Falls. Home inventory levels in San Diego have no effect on the average days on market for homes in Sioux Falls. The list price/selling price ratios in Seattle give no weight to the actual list price/selling price ratio here.
The macro view of the housing market can provide insight into market trends, of course, but each real estate market is specific to its specific area. The local economy, its growth trajectory, employment opportunities, government regulations, affordability, supply and demand all contribute to the local real estate market.
The statement of an increase in national stocks is a bit misleading. Nationally and locally, there is a lot of new construction, and often builders put homes on MLS that aren’t fully finished; sometimes only the foundations are laid. Buyers can’t move in and close on a house that’s just footings, so you need to take these new listings out of the equation because they’re not immediately available.
Prior to 2020, September was a statistically lower month of pending sales, primarily related to holidays, children returning to school, and families adjusting to the school year schedule again. However, the Sioux Falls area saw a 9% increase in year-over-year pending sales in September.
The advantage for buyers in our local market right now is that we have more inventory in the market so they don’t have to make quick decisions and probably aren’t competing with as many multiple offers. Inventory levels rose more than 2% year over year for the month of September.
The benefits for sellers in our local market right now are that our list price to sale price ratios are always over 100%, and we only have a 2.4 month supply of homes on the market, which which always makes it a very favorable seller’s market. . Sellers have more equity in their homes than ever before, which means they have more flexibility for bigger down payments on their next home, lowering their monthly payments and giving them more options to use the net worth to build their net worth through investment property.
As always, if you or someone you know has a life change coming up, Amy Stockberger Real Estate would like to help build wealth through real estate.
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