Now is the perfect time to buy
It’s 4 o’clock on a Friday, an hour away from happy hour in bars, restaurants and on lanais, and take my word for it plenty of people have a good reason to imbibe this week. The stock market is down over 100 points, just today ending this particular week with a new low of 11,346, oil is over $140 barrel and going up, gas at the pump is over $4 a gallon and climbing, and the air conditioner seems to never stop running. In spite of what is turning out to be a dreary economic year, there is still some good news.
A few weeks ago I reported that the number of sales on Anna Maria Island had significantly increased starting towards the end of March. On June 26, the May sales figures were published by the Florida Association of Realtors with some equally encouraging news.
For the Bradenton/Sarasota region, the number of Realtor sales were up 11 percent over May of last year, substantially better than the statewide figure of negative 5 percent.
However, the median sales price was down 16 percent from May of 2007, pretty much in line with the statewide average of negative 15 percent.
There’s also another bit of good news – mortgage rates are going up! The day I wrote this, the national averages for conventional mortgage rates were as follows: 30 year fixed, 6.27 percent; 15 year fixed, 5.84 percent and 30 year jumbo fixed, 7.38 percent. Jumbo loans are non-conforming mortgage loans above the Fannie Mae/Freddie Mac limit of $417,000 for a single-family home.
These rates are the highest since of October 2007, and based on the outcome of the last Federal Reserve meeting in mid-June, they will probably be going up further. In June, the Federal Reserve voted to hold interest rates steady in order to control inflation. If you recall, the central bank was cutting the prime rate steadily for about eight months, but now believes further cuts could negatively impact the rate of inflation.
In addition, it is also speculated that the Federal Reserve may start increasing the current 5 percent prime rate, possibly as soon as its next meeting in August or toward the end of this year. It’s true that changes in the prime rate have a greater affect on credit cards and home equity lines of credit than fixed rate mortgages. However, it’s also true that fixed rate mortgage rates are influenced by the general economy and the rate of inflation since they are tied to long-term bond yields.
So why do I think higher mortgage rates are good news? Remember all those potential home buyers sitting out there just waiting for the perfect time to buy. This is it. With rates almost definitely going up within the next six months and inventory starting to move, now is the time to get the best deals in both mortgage rates and home prices.
It’s been a long time since we’ve seen waterfront properties listed below $600,000 or anything listed below $300,000 on Anna Maria. If living on a barrier island, which hasn’t been overdeveloped, on the west coast of Florida is your dream, this is the time to make that dream come true.
Let’s keep the good news coming. If the Tampa Bay Rays and can have a good year and the New York Giants can do the impossible, I still have faith that 2008 can be the champion year for real estate. Enjoy happy hour and remember, it’s always 5 o’clock somewhere.