Utah Home Prices & Interest Rates Soaring!
Utah Home Prices and Interest Rates Soaring
Home Affordability is sharply decreasing for current buyers: Don't wait to buy!
A brief glance at recent news articles show the rapid changes currently taking place in the housing industry, greatly affecting affordability for those still hoping to jump into the housing market (see articles at the end of this blog article). When home prices or interest rates increase, home affordability decreases; when both increase simultaneously, the decrease in housing affordability is more drastic.
First Quarter year-to-date home prices are up 19% in Salt Lake County and about 12% in Utah County. Interest rates have shot up .5 to .75% in the past 5-6 weeks, with FHA fixed 30 year mortgages jumping from about 3.25% to 3.875% and 30 year fixed Conventional mortgages jumping from around 3.5% to 4.125%.
To illustrate how these increases affect home affordability, lets look at some numbers:
Home Prices: Lets take three homes in Utah County that had market values of $150,000, $250,000 and $400,000 in the first quarter of 2012. With the 12% increase in home prices, these homes would have market values of $168,000, $280,000 and $448,000 respectively in the first quarter of 2013.
Interest Rates: During this 12 month period, rates have increased between .5% to .75% depending on the mortgage program. For this exercise, a 30 year fixed Conventional mortgage with 10% down will be used to calculate estimated payments (PITI), assuming a .625% increase, from 3.5% in 2012 to 4.125% in 2013.
Housing Affordability Calculations:
- 2012: $150,000 home at 3.5% interest with 10% down 30 year fixede Conventional mortgage= payment of $781/month
- 2012: $250,000 home at 3.5% interest with 10% down 30 year fixede Conventional mortgage= payment of $1282/month
- 2012: $400,000 home at 3.5% interest with 10% down 30 year fixede Conventional mortgage= payment of $2039/month
If you are considering purchasing real estate in Utah, pelase schedule a time to meet with us to discuss your options, plans, goals and timelines. The time is now to best take advantage of what the Utah Housing Market has to offer!
Recent News Articles:
Home prices along Utah’s Wasatch Front surged in 1Q, sales flat
By Paul Beebe, The Salt Lake Tribune, Apr 29 2013
Single-family home prices in Salt Lake County shot up 19 percent in the first quarter of this year, but the number of new and existing homes sold was virtually unchanged, underlining the shortage of units for sale even as demand and the economy are picking up. The median single-family home price in the county increased to $228,750 in the January-through-March period — the highest first-quarter figure since 2009. In contrast, the median price last year was $192,500, the Salt Lake Board of Realtors said Monday.
Although prices surged, sales were nearly flat from the first quarter of 2012. There were 2,190 homes sold in the period, seven fewer than the same time last year. The first quarter is usually a slow sales period. Still, the situation was largely the same elsewhere along the Wasatch Front, including in Utah County, where sales in the state’s second-most populous county rose just 4.9 percent, but prices jumped 11.8 percent.
April home prices see biggest yearly gain in seven years: CoreLogic
NEW YORK - Home prices racked up their biggest annual gain in more than seven years in April as the recovery in the sector picked up traction, a report from CoreLogic showed on Tuesday.
Pending home sales hit three-year high
WASHINGTON - Contracts to buy previously owned U.S. homes rose to their highest level in three years in April, but a shortage of properties for sale could slow down the momentum.
Foreclosure sales tumble in first quarter: RealtyTrac
NEW YORK - Sales of U.S. homes in foreclosure fell in the first quarter, a report from RealtyTrac showed on Thursday, the latest data to suggest the housing market is on the mend.
Surge in U.S. mortgage rates could force buyers off the fence
NEW YORK - Worries the Federal Reserve may begin to slow its stimulus efforts sent U.S. mortgage rates last week to their highest level in a year, a surge that could be a headwind to the nascent housing recovery should they march much higher.
Home prices accelerate by most in seven years
NEW YORK - Home prices accelerated by the most in nearly seven years in March as the spring buying season gave the sector traction, while surging consumer confidence pointed to some resilience for the economic recovery.
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