Should Mortgage Rates and Inflation affect my Home Search?

To List, To Buy or To Wait?
With inflation and rising mortgage rates people are starting to hesitate on whether now is the time to buy a new home, in result making sellers anxious if now is the right time to list their home. While the media and the news may be increasing the worry among home owners/home buyers you can rest assured Front Porch Properties will give you the best guidance for your unique situation. But for now, let’s address the concerns.

Starting with our local market here in Charleston we aren’t seeing any large changes to the habits of home sellers or home buyers just yet. There were 2,024 homes sold in June (10% less than this time last year in the midst of COVID and historically low rates). Median price is up 16% YTD and inventory is up 20% YTD. One of the biggest hurdles in our housing market through Charleston County and surrounding has been the limited inventory. This increase is beginning to slightly shift the playing field to a more even territory between buyer and seller. However, we are not seeing ANY halt in demand, cost, closing times or buyer competition.

Inflation has everyone in a lot of turmoil (including myself and my family). Gas is high, groceries are unbearable. It’s normal that the thought of buying a house (at top dollar) may not be appealing. If you are in a good place in your home it may make more sense to let the dust settle; BUT if you are relocating, outgrowing or renting you shouldn’t let inflation dictate your decision not to buy a house in Charleston today. Real estate is actually a great defense against inflation.  If you buy now, you lock in a price and mortgage payment in today’s dollars — not the less valuable dollars of the future. Housing is an asset that typically grows in value. Plus, your mortgage helps stabilize your monthly housing costs. Housing (even with rising mortgage rates) is also more affordable than the ridiculous increase in rental prices throughout Charleston.

It’s easy to understand the hesitation with mortgage rates, especially when considering the prices of houses in Charleston, S.C. At a 4% rate your interest $998 a month at a 6% rate your interest $1608 a month. Not chump change. However it’s important to remember when rates drop it’s easy to refinance. Refinancing is usually worth it if you can lower your interest rate enough to save money month-to-month and in the long term. Depending on the loan, dropping your rate by 1%, 0.5%, or even 0.25% could be enough to make the refinancing fees (closing costs) worth it. So if your growing family needs more space, you’re tired of paying increasing rent costs or relocating for work the rates aren’t forever. For a $300k loan with 20% down and average credit you’re probably looking at a 5-5.8% rate today. STILL HISTORICALLY LOW.

If you’re still concerned, what some idea of what you can afford or what’s out there, or just want to discuss options please don’t hesitate to reach out.