We’re Americans; we borrow

Castles in the Sand

Americans are very comfortable with debt, whether its household debt or government debt. And apparently, rising interest rates aren’t making any difference in our enthusiasm for borrowing.

The Federal Reserve Bank of New York has reported in its quarterly statement that household debts rose by $82 billion in the second quarter of the year. Much of this is because of higher interest rates for mortgages, credit cards, and auto loan balances. Household debt is now nearly 20 percent higher than five years ago and higher than before the financial crisis. Nevertheless, the feds report delinquency rates have been stable for most categories of debt and actually falling for student loans presumably because of the improved labor market.

In an effort to return interest rates to the levels before the financial crisis, the feds have been gradually raising rates since 2015. The average rate on a 30-year, fixed-rate mortgage was 4.6 percent a few weeks ago, up from a low of 3.4 percent in 2013. We can expect this to continue possibly influencing marginal buyers from qualifying.

Buyers with lower credit scores may be seeing those scores increase if they had collection accounts removed from their credit reports. The three credit reporting firms have agreed to remove items like collections for gym memberships, library fines and traffic tickets from reports as well as medical debt collections that were ultimately paid by insurance companies.

So how is any of this increased borrowing affecting our real estate markets? These are the statistics for Manatee County for July from the Realtor Association of Sarasota & Manatee.

There were 19.2 percent more single-family homes closed this July compared to last July. The median sale price was $309,500, which is 3.2 percenter higher than last year. The average sale price was $383,398, 2.4 percent higher. Median time to sell was 90 days compared to 92 from last year and the month’s supply dropped to 3.9 percent below the 4 months we’ve been carrying.

Condo sales for July were also up compared to last July at 10.1 percent. The median sale price was $199,250, up 20.8 percent, and the average sale price was $231,836, up 10.3 percent. Median time to sell was 87 days compared to 105 days last year, and the month’s supply of properties was also 3.9 percent.

Our market keeps improving in both number of sales and sales price and is apparently not slowing down because of the increased cost of borrowing. We’re also doing better than the state in all areas but one. Based on the July sales statistics published by the Florida Realtors website under market data, the single-family median sales price was $255,000, up 6.3 percent and the average was $335,055, up 5.7 percent. The number of sales for single-family was also up 3.8 percent.

The state of Florida condo sale median price was $180,000 in July, up 5.3 percent, and the average was $247,413, up 1 percent. The number of closed sales were up 8.5 percent.

The month’s supply of single-family properties for the state was 3.9 percent the same as Manatee County’s. However, the month’s supply of condos was 5.3 percent well over Manatee’s.

If you’re going to have debt, mortgage debt is the easiest to justify. You have to live someplace, so a home of your own where you can build equity is always better than paying rent. Based on our sales statistics buying a property in Manatee County looks like a good investment, and we do love debt. It’s the American way.

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