The National Association of Home Builders (NAHB) cited reports today (http://www.nbnnews.com/NBN/issues/2006-07-31/Front+Page/index.html) from the US Commerce Department and the National Association of Realtors that show a significant slowdown in sales of new and existing home sales. This slowdown is attributed to continued interest rate hikes by the Fed which of course makes mortgages more expensive and houses less affordable. If the Fed raises rates again on August 8, 2006 it is expected that this problem will get worse.What does this mean to you if you already have a home? Well, it means borrowing for home improvement projects is more expensive. It also affects you if you plan on selling your home soon. Sales of existing homes are down 8.9% from this time in 2005. The NAHB quotes David Lereah, chief economist for the Realtors® as saying “... sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories. Home prices are only a little higher than a year ago.”
So the bottom line is that facing more competition for buyers in a slow real estate market and rising interest rates, you will need to put your home's "best face forward" when selling or thinking of improving your home.
The home improvement article series I wrote will help explain what types of home improvement projects will help you sell faster and make money when improving your home. Take a read of ROI Series Introduction: Investing in Your Home Improvement to learn more.
Comments
I bought my home when rates were 12 percent. Rates are not really high just higher than very low rates that have been around only a few years.In the early 80’s rates were as high as 18 percent.
Very true Charlie. My first house was bought in 1980 with a 14% mortgage. That was a time of tough economic recession with gold at $800 an ounce too. Let’s hope we never go back there. Folks have gotten used to these low interest rates over the past years which have helped keep the economy afloat and home prices strong.