UtahCribs Weblog

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Interest Rates will rise in 2010.. Current interest Rates are extremely low..

Posted by UtahCribs, Real Estate, Homes on April 15, 2009

As many of you know, we are in an interesting moment in history. Our current economic situation is uncharted territory for many individuals. I am a 28 year old Real Estate Broker from Salt Lake City, UTAH. What do I know? 

That is the beauty of all this. None of us really know what is going to happen! We watch on the news every night different analysts telling us completely different things. 

Fact. Currently interest rates are at an all time low. Fact. Real Estate prices are depressed and lower than they have been in years. Fact. In Salt Lake City, Real Estate prices have gone back to the prices before the boom. So basically you can just push delete on the last 5 years. Almost like it never happened. 

Fact. Interest Rates can not stay this low forever. If they did we would be in a situation far worse than the current one. Inflation is on the rise, and the one thing the Fed. can control to combat that is raising interest rates. So, rest assured the one thing we all can predict right now, is that the great interest rates you are seeing advertised all throughout the media will not last forever. I am predicting by 2010 you will see an increase. Which will mean the average persons monthly payment will go up possible $200- $500 a month.. So take advantage now..

Spencer Janke

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10 Responses to “Interest Rates will rise in 2010.. Current interest Rates are extremely low..”

  1. It is interesting… Low interest rates, great real estate prices. Still… buyers are sitting on the fence…WHY? We know rates will eventually go up. I think people are just un-sure of what their economic future will be. Good post!

  2. Sam said

    I have to admit I’m still on the sidelines. We are experiencing more deflationary pressures than inflationary (been to the mall or car shopping lately?) Home prices have slid significantly, but nobody knows if we’ve hit a bottom yet. I’m waiting to see 3 months of stabilization in prices or even a slight uptick before making a purchase. I’m not concerned about interest rates, just the price of the house. Historically, home prices have decreased as interest rates increase.

    I like checking out the deals your blog serves up, keep ’em coming.

  3. Sam, You are wise and I understand your point. Let us add some expertise though…..You say “nobody knows if we have hit bottom.” There are a couple of problems with that. HOW DO YOU DEFINE A BOTTOM? and WHO tells you we’ve hit one? AND are you speaking of the “real estate market” as ONE large national market?

    Here is the deal:

    # 1 Everyone talks of bottoming lately, do they mean PRICE LOWS, SALES LOWS ect? Here in Utah (or SLC specifically I should say) we hit SALES LOWS in nov and dec. We averaged about 98.7 houses going under contract every 5 days. In Jan we went up 16%, in Feb we SHOT up 62% and Mar another 16%. Then the most staggering of all…..last work week, in 5 days 289 house went under contract in SLC- Almost TRIPLE the dec. lows!

    Now of course the MEDIA has not reported this, it’s too new…..and they think of real estate as most of the consumers do, ONE BIG NATIONAL MARKET!

    Fact if the matter is this, real estate is a LOCAL business. Sure, it’s affected by national factors but always has been and remains a business of local markets. Here in SLC we have picked up SHARPLY (not my opinion, a FACT).

    # 2 Most consumers are sitting on the side lines right now waiting for the media to declare that it is time to buy. When that does happen you will be far to late to get the BOTTOM prices. As I explained above, the “bottom” as far as sales numbers goes has already hit months ago. Once SELLERS feel the market is improving they will negotiate less.

    # 3 RATES! Everyone who thinks that rate is not as bog a deal as purchase price is ignorant. Please don’t take offense….but look at the MATH. For example, let’s pretend you buy a $300K house RIGHT NOW at 4.5%. You payment would be $1520 a month (if fully financed). Now let’s pretend you decide to WAIT to buy that house until NEXT winter and the price goes down another 7% and you can buy it for $279K (a $21K savings). BUT NOW at that time rates are 6.25% (as feds suspect). You will now pay $1717 a month for that house. $197 MORE a month that if you bought at $300K with letter rates. But let’s remember, you saved $21K in a purchase price. Well run the math…..if you live in that house for more than 8 years…….that extra $197 a month you pay adds up to over $20K in 8 years and a half years.

    Rate of money is one of the BIGGEST factors to consider when buying a home. And rates WILL go up. Don’t listen to the media…..google REAL economists and the FED’s. They have said time and time again that rates will start to rise this fall.

    SIDE note too…..I don’t think you”ll save ANY on pricing by waiting around either, maybe in other locations but NOT Salt Lake City Utah. Sales are going up….not down. FACT, not OPINION. see the stats on our blog.

    Thanks for READING!—– JAKE BREEN MBA, Associate Broker

  4. […] Posted by UtahCribs, Real Estate, Homes on April 21, 2009 Hi everyone! I found this article today that explains just how low interest rates are right now. They have been below 5% for five consecutive weeks now and running. We have a client who locked in at 4.75% just this week. For more information regarding just how much a good interest rate can affect your purchase, see the comments on the article we posted a few days ago at https://utahcribs.wordpress.com/2009/04/15/interest-rates-will-rise-in-2010-current-interest-rates-ar…. […]

  5. mai said

    AHHA It is a good thing for me. Thanks. I like this. ^_^

  6. John said

    Your advice to “take advantage now” makes no sense and reminds me of the pre-bubble babble that we all heard from the real estate pundits and which got us into this mess. If interest rates go up (as you predict) and monthly payments increase (as you point out) then there will be even more DOWNWARD pressure on housing prices. Why would you want to get in “now” just before rates go up and there is even more downward pressure on prices? We have not hit bottom until housing prices can withstand rising interest rates. We are not there yet and probably will not be until 2011 or 2012. Sounds like a long time, but it typically takes longer for a bubble to unwind than it takes to wind up. There is no shortage of real estate brokers and government politicians eager to convince you that “now” is the time to buy. My advice, be patient.

    • John thanks for your input. This is why do the blog so that people get talking about real estate. As this industry goes, so goes the other markets in the country, and everyone has their opinions and different methods and schools of thought when it comes to money and investing. We at Utah Cribs like pointing out the facts because you can’t argue with the truth. People can then make their own decision on what to do, but we do believe it is a great time to buy and we will stand by that statement after studying this industry daily and understanding the facts.

      Fact #1 is that rates are historically low. When have they been lower? Here is a copy and pasted excerpt from a previous comment on this blog to illustrate the importance of rates:

      “…RATES! Everyone who thinks that rate is not as bog a deal as purchase price is ignorant. Please don’t take offense….but look at the MATH. For example, let’s pretend you buy a $300K house RIGHT NOW at 4.5%. You payment would be $1520 a month (if fully financed). Now let’s pretend you decide to WAIT to buy that house until NEXT winter and the price goes down another 7% and you can buy it for $279K (a $21K savings). BUT NOW at that time rates are 6.25% (as feds suspect). You will now pay $1717 a month for that house. $197 MORE a month that if you bought at $300K with letter rates. But let’s remember, you saved $21K in a purchase price. Well run the math…..if you live in that house for more than 8 years…….that extra $197 a month you pay adds up to over $20K in 8 years and a half years.

      Rate of money is one of the BIGGEST factors to consider when buying a home. And rates WILL go up. Don’t listen to the media…..google REAL economists and the FED’s. They have said time and time again that rates will start to rise this fall.

      SIDE note too…..I don’t think you’ll save ANY on pricing by waiting around either, maybe in other locations but NOT Salt Lake City Utah. Sales are going up….not down. FACT, not OPINION. see the stats on our blog.”

      Rates have actually creeped up to about 5.25% the past couple weeks giving more validity to the previous quoted statement that rates will be higher by Fall.

      Here is another article from http://www.ksl.com that also explains the rise in sales in June, which is a sign that prices are stabilizing. http://www.ksl.com/index.php?nid=148&sid=7227628

      Hopefully this gives some insight as to what is really happening, right now, in OUR market.

  7. jake breen said

    Couldn’t have said it better Brad….consumers need to start delineating between FACT and OPINION. We all have opinions….ksl article has tunz of quotes from NON-experts who say blanket statements like “Market will still go down and CRASH.”

    I say 2 things to this: # 1 based on WHAT FACTS? # 2 What gives you the authority to declare this broad statement?

    No one knows the future and it can change….I am no predictor. BUT, being in the industry and watching the market like a hawk daily I can tell you a few things:

    # 1 rates are low and will NOT get lower. 30 year fixed 4.5% loans are GONE and if you WAITED you missed them (I didn’t and I am fixed at 4.875% just to show I put my $$$ where my mouth is).

    # 2 Sales have increased 50% in VOLUME from the lows of winter and prices are down on average in SLC from the peak about 29.7%. Supply has NOT increased anything significantly from the peak of last winter. Anyone have economics class? YOu make your OWN logical conclusion…..

    jake

  8. John said

    Anytime is a good time to but RE. If the deal is right, then that’s all you need to know. Trying to pick the bottom of markets is just guess work. Look at the deal and see if the deal works for you. e.g. I buy a house in a nice area of town. I pay $300 a week to the Bank in Interest. I can get rent of $320 a week.
    So it’s not costing me anything. And since it’s in the right part of town, then prices should go up over time and so should rents. Pretty low risk deal to me. I’ll take it.
    cheers,
    John Bradshaw

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