Interest Rates and Housing Prices South Florida


– Follow the yellow brick road, follow the yellow brick road. Just kidding follow the interest rates. Stay tuned I’m gonna tell
you exactly what that means and why it’s so critically
important for you right now. (techno upbeat music) Hi I’m Traci Tam a
Florida real estate broker and I put out weekly videos about life and living in
the South Florida Area, and all Things real estate. So if those topics interest
you please feel free to hit that subscribe
button and tap that bell so you don’t miss any
of our upcoming videos. Hopefully we don’t get
windblown away out here. Every time I try to film
outside in my backyard, it seems the wind picks up to
30 to 40 mile an hour gust. Anyways, I can’t release
all of the details of the news today, but I did want to share
with you guys something that’s super exciting that
I’m gonna be releasing in the next couple of days. Probably next week is that I’m working with a boutique developer here
in the South Florida area, and he’s actually going to be offering our customers 20,000 dollars
towards closing cost. These are beautiful
custom homes in non-HOA, so there’s no home owners association. There’s room for a pool. They’re almost on half acre lots and they’re in that
400 to 550 price range. So I’m super, super excited. And as soon as I get all of the details y’all are gonna be the first
ones I’m sharing it with. So let’s get to it. Follow the interest rates,
what does that even mean. So we all know that the
media is very sensational and they’re trying to get
you to open up that link or read that newspaper article. But what I want to get you to do is to educate yourself on the facts. Okay sorry about that as you can see we almost got blown away again
so we had to move inside. So, fact number one, there most
likely will be a recession, in the next 12 to 18 months. Fact number two, the last
four out of five recessions, have had no impact on housing prices. And fact number three is,
you can’t time the market but you can educate yourself
on some of the best experts in the housing industry like
Goldman Sachs, Fannie Mae, and Freddie Mac. As a real estate agent I study
the market every single day and I definitely follow
those interest rates. I also reach out to my trusted
lenders to stay current on the market trends. You’re probably gonna get sick
and tired of me saying this but I cannot stress this enough, interest rates are at an all time low. Let’s discuss a little bit of
the past of interest rates. In 1985, interest rates
were right around 11%. And in 2000 they were
at about seven percent. Today October 2019 they’re right
around the low four percent for a 30-year fixed. And about three and a half
percent for a 15-year fix. Let’s take a look at
this graphic to show you what a one percent or even a
half percent interest rate does for your purchasing power. And how it’s so important
to follow the interest rate. You could have an interest
rate change of a half percent or a full percent and
it dramatically changes your purchase price by
30 to 50,000 dollars. If you’re shopping in that
400,000 dollar price range, for example, this time
last year interest rates were hovering in the high fours. So a half two or percent
higher than they are right now. Let’s say you’re purchasing
a home for 400,000 dollars. A one percent increase
in the interest rate will increase your monthly payment by 234.00 dollars a month. And will also decrease
your purchasing power. So that means that if
you’re looking at a property for 400,000 dollars, and
the interest rate increases by one percent you would
actually only be able to afford a 360,000 dollar home because of the interest rate. If you reverse that and can
afford a 360,000 dollar home at a five percent interest rate, if interest rates fell by
one percent you’d be able to buy a home at 400,000 dollars with everything else staying the same. All because of the interest rate. That is a big difference
and has nothing to do with home prices. And that is with everything
staying the same. All because of the interest rate. That is a big difference
and has nothing to do with the price of the home. So even if you bought a home
more than two years ago, it might seem like
you’re paying less today but it’s not because that
home has decreased in value it’s all because of the interest rates and how low they are right now. Everybody knows that home
prices have everything to do also with supply and demand. So I’m not gonna talk to much on that but I will tell you that
there is very little supply for that 200,000 to 400,000
dollar first time home buyer home and it’s in big demand. We have a less than three months
supply of that price point and I’ve been practicing real estate here in South Florida since 2005 and I personally have never
seen a market like this. We have such an influx
of people moving here from New York, and from
California, and from up north. I mean who wouldn’t want
to live in South Florida. It’s an amazing lifestyle where it’s beautiful
weather 365 days a year. But with that being said, we also have a large senior population and those seniors are
staying in their homes longer because they’re living longer, because of our amazing lifestyle. So our supply of homes is
critically low right now which is good if you’re a homeowner and you’re thinking about
maybe taking out the equity in the home that you have. And getting out of that
home owners association, or getting that extra bedroom because maybe you’re outgrowing your home, or that larger yard. Now is the perfect time
to take that equity out with interest rates being so low and then move up to that
dream home with that cool, without a homeowners association or whatever your wants
are in that next home. So I’m also going to have a link below that is gonna give you a
instant value of your home. It’s not precise cause obviously
I haven’t seen your home but it will give you a general idea of what the homes are
selling in your area. So then you’ll know about
what your mortgage payoff is and the equity that you have in your home that you can use to move
up to that next home. So the recession that
the media keeps trying to shove down your throat, and make you scared about because I know that, that word
has a negative connotation, especially if you experienced
the housing crisis of 2007 and 2008 and you
lost everything, I get it. But this recession has nothing
to do with home prices. Like I said at the
beginning to not believe all the sensationalism in the media and educate yourself from the facts. The expert economists on housing
they’re actually predicting across the entire United States
for home prices to continue to appreciate about three to four percent or three to five percent in some areas over the next 12 to 18 months. And actually in South Florida
over the last 12 to 18 months depending on what price point you’re in, we’ve seen some areas that
have appreciated 11 to 15%. So we have to keep that in
mind to with appreciation and low interest rates. If you are looking to buy, once again now is the time. So as I’m ending one last time, make sure you follow the facts, block out the media sensationalism, and seek out your local experts
for advice and guidance, and once again follow the interest offer also here in Florida. As always thanks for
watching another episode of Talk with Traci and
I’ll see you next week on our next episode. And once again if you haven’t
subscribed to my channel and Life and Living in
the South Florida Area and All things Real Estate interest you, make sure that you hit
that subscribe button and tap that bell. See you next week.

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