Nov 2, 2023 | QA
Published on our October 2023 Newsletter
Question: “What effect has the increase in mortgage rates had on buyers and sellers?
Christie’s Answer:
Here are the three things which have the potential to affect on Buyers:
- The cost of homeownership has increased.
- It is affecting the ability of some buyers to qualify for a mortgage.
- In markets such as this, some lenders tend to become a little more conservative. While we don’t expect them to change guidelines, we do expect that they may become more conservative in their pricing.
Sellers could be affected in these ways:
- Second home sales, whether houses or condos, may begin to slow. This is a big part of the St. Croix market.
- Investment and speculative buying may also begin to slow. These buyers are likely to search out other investment options which may b more attractive as rates increase.
- As the real estate markets and players try to “right size” themselves after a few boom years, we may find that Days on Market will be affected.
Oct 23, 2023 | Island News
Mortgage rate is an important topic for many home buyers and also for those looking to refinance their property. Many are keeping a close eye on the trajectory of interest rates as they plan their real estate purchase.
Freddie Mac started recording mortgage rates in the US in 1971. The median 30-year mortgage rate is 7.41% since the April 1971 according to an article from US News & Reports. The fluctuations from historic highs and historic lows during this period has been dramatic. According to Bankrate’s recent article, “Historical mortgage rate trends can give you a sense of how economic conditions influence the rates available on the market today. From the 1970s to present, mortgage rates have fluctuated up and down. Overall, the annual average 30-year mortgage rate has trended downward since 1972, according to Freddie Mac’s Primary Mortgage Market Survey.”
To learn more about historical mortgage rates over time, we highlighted a few articles that would be helpful to understand:
- what have the mortgage rates been historically?
- what factors effect mortgage interest rates for homebuyers?
- what factors effect mortgage interest rates for home refinancing?
The articles are:
Bankrate’s Current and historical mortgage rate trends: 1970s to 2023
US News & Reports’ Historical Mortgage Rates: See Averages and Trends by Decade
Sep 29, 2023 | QA
Published on our September 2023 Newsletter
Question: “Why don’t so many condo complexes qualify for financing?
Chris’s Answer:
Currently most condos on St. Croix must be purchased for cash since they don’t qualify for financing. A condo complex is warrantable if it operates as closely to a residence as possible and is not seen as a “condo hotel” and complies with Fannie Mae and Freddie Mac Mortgage guidelines. When lenders are considering loans on condos in a specific complex, they look at many factors: some HOAs, while insured, don’t meet the lenders guidelines for coverage, the number of vacation rentals in condo complexes is increasing, and a couple of condo complexes rent office space to agencies that rent condos inside the complex which can appear to lenders that the complex is a condo hotel.
After Hurricane Maria in 2017, insurance companies paid claims which were sometimes substantial. Many insurers decided to raise their premiums in subsequent years. Condo complexes handled those rate increases in different ways. Some passed them along as either increases in the monthly HOA fees or as special one time assessments. Some HOAs reduced their premiums by increasing their deductibles or by lowering the amount of their insurance coverage.
Lenders want the properties they finance to have a certain amount of insurance coverage. Some lenders have become unwilling, in the short term, to lend into some complexes until these issues can be resolved by the insurers and individual HOAs. Many of the Condo Boards on St. Croix are currently reviewing these issues, and working with the insurers to make adjustments to their coverage so that lenders are satisfied.
Do you have other real estate questions, contact us!
Sep 11, 2023 | Reports
Find the monthly insight and sales data for the St. Croix, USVI real estate market! We have downloadable Coldwell Banker real estate reports — available below for each category: Homes & Condos, Condos, Homes, and Land! The sales data will be help you understand the number of listings sold, days on market, the median price listed and sold, and much more.
If you are not familiar with with the implications of the data, please give us a call or email us directly with any questions. We are Accredited Buyer’s Representative (ABR) and Seller Representative Specialist (SRS) and have the experience and local knowledge to help you in every step of the process. We can help you narrow down neighborhoods based on your priorities. We can also advise you on the market trends in your desired neighborhoods.
Open reports by clicking on links below:
Homes & Condos – August 2023 Area Report
Homes – August 2023 Area Report
Condo – August 2023 Area Report
Land – August 2023 Area Report
Note: The average sales price and the average days on market could be skewed greatly by only one sale or because of the small number of sales
Aug 22, 2023 | Island News
According to the Washington Post, over the past 18 months, mortgage rates have more than doubled as the Federal Reserve has repeatedly increased interest rates to fight inflation. Mortgage rates jumped to their highest level in more than two decades, with the average 30-year fixed loan coming in at 7.09 percent the week before this August 18, 2023 article was published. Read the full article here, we recommend it!
Mortgages have become more expensive because of the Federal Reserve’s campaign to get inflation under control by raising short-term interest rates to try to cool down the economy. This also causes longer-term rates like mortgages to also rise (see what experts say about this in an article from CBS News here).
The higher rates make home-ownership less affordable for many would-be buyers who rely on home financing. Similarly, the higher rates have also made potential sellers reluctant to sell their current homes for those who would likely have to pay more in mortgages for their next house purchase. However, industry analysts point out that home buyers still bought homes and took out mortgages when mortgage rates climbed throughout the 1970s and reached more than 18 percent in the early 1980s.
When home buyers with concerns on the high interest rates ask us when is the right time to buy, we advise buyers that the decision is based on their own readiness to buy and comfort level. Here on St. Croix, every property is truly unique. As we tell people, it may be your “forever home”, but it doesn’t have to be your “forever loan”. When interest rates go down, you can refinance, and you will have the property you love!
