The Fed cut rates, so what does that mean for homebuyers?
Mortgage rates have recently hit a new low in the anticipation of action by the Fed. Now that the Fed has cut the federal funds rate by half a percent, you may be wondering how that affects your qualification amount and subsequent monthly payment. While the Fed cutting the federal funds rate is helpful for the stock market and banks with regard to short-term loans (think credit cards, personal loans, HELOC's), it doesn't do what we might think to mortgage loans which are long term loans. Mortgage rates are closely tied to the Federal 10-year Treasury yield. When there is volatility in the market, investors seek a safer return on their investment so they go to bonds as opposed to stocks. The more money there is in the bond market, the less expensive it is to borrow money long term. "The Federal Reserve doesn’t set mortgage rates outright. But its monetary policy moves do impact interest rates and, in turn, investors’ search for returns. When they seek out Treasurys, the bonds’ prices rise and their yields fall. Tied as they are to the 10-year Treasury, mortgage rates then follow suit." (Dehan) While it may seem like the Fed cutting rates means even lower mortgage rates, we'll probably plateau around the low to mid 6's for a while, with anticipation to get into the high 5's by end of Q1 2025. It is so easy to get confused by conflicting information, especially in today's world of online news and social media. Make sure you are aligned with a team of local experts (lender, REALTOR, financial advisor, etc.) to keep you up-to-snuff on what the market is doing real time. Sarah Aguilar, REALTOR Arizona | Nevada 520-878-7603 realtor@sarahaguilar.com BIG Realty Solutions SA662054000 Show Vegas Realty S.0183808.LLC Sources: https://www.bankrate.com/mortgages/mortgage-rates-fall-with-treasury-yields/#:~:text=The%20Federal%20Reserve%20doesn't,mortgage%20rates%20then%20follow%20suit.
Are condos going extinct?
Not exactly... But condo sales have been consistently lagging behind Single-Family homes in the last several months and years. In July alone, condo sales were down 12% nationwide from the previous year contrasted to a mere 1% down tick for single-families. Here are a few things to keep in mind if you're on the house hunt and considering a condo: 1. Slower appreciation Overall, condo list prices are down 5.4% from a year ago as opposed to single-family homes which are up 0.2%. From an investment perspective, it may take longer to see any ROI on a condo vs a single-family. 2. HOA Fees The average monthly homeowners association fee for condos listed on Realtor.com is $650 - add that to already sky-high mortgage rates and what seems like the more affordable option, might have you priced out before even getting through the door. Part of what is pushing HOA fees higher is an influx of claims paid out vs premiums collected, specific to condos. Complexes built in the 70's & 80's are prime for deferred maintenance. Insurance providers are becoming more strict with which policies they write for and the costs are adjusting accordingly. Higher premiums + rising maintenance fees = higher HOA dues 3. Supply > Demand Given slower appreciation and higher HOA monthlies becoming more common, condos are sitting an average 8 days longer on the market. On the flip side, longer days on market gives you a unique negotiating footing when making an offer. Econ 101: what happens when supply surpasses demand? Prices go down. Moral of the story here is if you're heart is set on that 2nd floor walk-up, make sure you have a good REALTOR to help you navigate the nuances of condo living and advise you on the best decision based on your short and long-term goals. Sarah Aguilar, REALTOR Arizona | Nevada 520-878-7603 realtor@sarahaguilar.com BIG Realty Solutions SA662054000 Show Vegas Realty S.0183808.LLC Sources: https://www.nar.realtor/research-and-statistics https://www.realtor.com/news/trends/condo-market-sales-slowdown/?cid=eml__1946:66ddc319e08fdf11030cff87:ot_Marketing_Consumer_Daily_Editorial090924&crdl_section=Article%201
Arizona Mortgage Tax Credit
CIC's Down Payment Assistance programs help you get into a home, the MCC program ensures you can afford to STAY in your home! Community Investment Corporation’s Mortgage Credit Certificate (MCC) program allows first time home buyers* in the ENTIRE State of Arizona to claim up to $2,000 of their annual mortgage interest as a federal tax credit – each year and every year they live in their homes. MCCs can save homeowners $50,000+ over the life of their mortgage. The MCC program is funded by The Pima County Industrial Development Authority *A first time home buyer is defined as a person who has not owned a home in the last three years. Qualified military veterans or people purchasing a home in a targeted area also can qualify for an MCC. Contact me for more information on applying for this program & finding a home that qualifies. Sarah Aguilar 520-878-7603 (call or text) realtor@sarahaguilar.com https://cictucson.org/mcc/?gad_source=1&gclid=Cj0KCQjw5cOwBhCiARIsAJ5njuZmYAfWF4HGZPxL0eXB68oOs1RqEOE9yO1rskmJ7SJ-UGa7xbhOJOQaArzjEALw_wcB