Keeping it Real: Housing prices, interest rates up
by Carla Carroll
Jun 28, 2013 | 2615 views | 0 0 comments | 102 102 recommendations | email to a friend | print
In recent weeks and months, both property values and interest rates have increased. There are opportunities and challenges for home owners and prospective homeowners with these changes.

Home prices in Tracy have risen about 29 percent from last year. According to the real estate website, the average listing price for local homes for sale in the week ending June 12 was $368,294.

Interest rates have also climbed, due to speculation that the Federal Reserve would slow its buying of bonds. The market trended upward on May 24. Rates recently rose from 3.875 percent to the high 4 percent range.

On June 19, it was announced that the Fed will not be making immediate changes to its $85 billion-a-month bond purchasing stimulus program. Still, uncertainty has caused market volatility.

In perspective, these are still historically low rates.

Consequences for owners

With increasing property values, homeowners may see gains in equity, providing an opportunity for some borrowers who were underwater — owing more than their homes were worth — to refinance.

Those with FHA loans may be able to refinance to a conventional mortgage. When loan-to-value ratios are 80 percent or lower, borrowers may also be able to eliminate mortgage insurance.

With property values rising, property taxes will likely follow the trend upward. Property tax notices go out at the end of June.

With regard to the city of Tracy, this will provide additional tax revenue that should be beneficial.

Impact on buyers

Homebuyers are also affected by anxiety about rising interest rates while they are shopping for a home in a competitive market.

Juana Dement, a local realtor at Century 21 MM & Associates, recently stated: “If cash is king, than buyers who can afford to offer over list price with no appraisal contingencies are the newly crowned princes.”

Although buyers are eager to purchase homes before they are priced out of the market, cooler heads will prevail.

There are still hundreds of homes in various stages of foreclosure or upside down in Tracy. It takes awhile for these homes to show up as foreclosures or short sales.

With new home building around the corner, sellers will be moving up, creating more inventory for Tracy.

As values will likely continue to increase — and rates also seem to be trending upward — there will to be factors that homeowners and prospective homeowners must pay attention to in the days and months ahead. It’s a changing market.

• Carla Carroll is a senior loan officer at Diversified Capital Funding in Tracy. She can be reached at 914-3753 or
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