As reported on Economists’ Outlook, home prices rose in 41 states and in D.C. during the first quarter of 2013. FHFA (Federal Housing Finance Agency) data shows home prices throughout the United States rose by 6.7 percent since the first quarter of 2012.
Nevada, Arizona, California and Idaho were up more than 15%, making the West the highest in the housing market price gains.
Interest Rates Rising, or Not?
Not only are home prices rising, which means some sellers who waited will now be listing homes, but some experts say interest rates are also expected to rise and are suggesting you get a loan in 2013 if you want to get into that mortgage at a 4 percent interest rate. This prediction by the MBA and economists is based off not only the improved housing market but also because of the changes to the government’s involvement in a program that has been helping keep rates low, The Agency Mortgage-Backed Securities Purchase Program. This program was developed by the Federal Reserve, the United States’ central bank to respond to the financial crisis of 2008.
In September of 2012 the Federal Reserve announced it would be buying $40 billion of agency mortgage-backed securities each month until the economy started to show signs of improving (According to Kiplinger’s the Fed has been purchasing $85 billion worth of Treasuries and mortgage-backed securities each month). This helped keep the interest rates down but an improving economy will mean the Fed’s will back off on involvement and this will drive the rates up. Some experts say this will happen this year, others say it won’t happen for another year until their is a solid economic improvement. Consumers are leery of any predictions.
Yet, if you are thinking of buying a home, according to these predictions, doing so in the earlier part of 2013 would be a wise move no matter which predictions you believe, those that say rates will stay low for another year or so, or those who say they will rise by the end of 2013.
We all know there are no guarantees when it comes to housing markets or the economy. The important factor is the same it has always been…do you want to buy or sell a home and if so, doing so in any market that works better for you makes sense. We may not know what the interest rates will be next year but we do know they are historically low right now while housing prices are rising. Buying while interest rates are low you can get more home for less per month but if you wait, that same home may cost you $200+ more per month just in interest if rates do rise.