How will rising interest rates affect the San Antonio real estate market? Local real estate, lending service weigh
SAN ANTONIO – The Federal Reserve instituted its largest interest rate hike in nearly 30 years on Wednesday, but that shouldn’t slow San Antonio’s housing market.
Jack Hawthorne, CEO of Keller Williams Heritage, said the federal government’s decision could loosen our market for potential buyers.
“As strange as it sounds, it’s actually a really exciting time if you want to buy a home,” Hawthorne said.
“People are kind of like, I don’t know if I want to buy. I don’t know if I want to sell. That means sellers don’t get as many offers. Every time you go out and bid on a house, instead of competing with 27 other people, you’re competing with maybe two. And now you have the ability to ask for things that you couldn’t before,” Hawthorne said.
Another thing Hawthorne said to keep in mind is that if potential buyers are thinking of buying a home right now, they can wait for interest rates to come back down, but home values in San Antonio continue to go down. ‘increase.
“Interest rates can go down to 3%, but this house is going to be valued 15 to 16% more when you buy it. So either way the house is going to get more expensive to buy,” Hawthorne said. “What’s usually the best option is to buy the house, plan to refinance in a few years and the rates go down because once you own it, you benefit from that appreciation.”
Hawthorne said that while the appreciation we’ve seen over the past few years “is extremely unsustainable,” prices aren’t going to go down, but appreciation will go down.
“We’re going back down to a normal rate of appreciation of 4 to 6%. But the prices, they now have a floor. It’s not expected to drop because we have such a shortage of supply in San Antonio,” Hawthorne said.
Lisa Arlette, vice president of Mortgage Lending San Antonio, said if you’ve been looking to buy a home for a while, it’s important to note that some local families may be priced out of the money with this hike.
“We’ve almost doubled interest rates since January, so if they’re working with that pre-determined information, it’s no longer accurate,” Arlette said.
“The debt-to-income ratio is one of the main qualifying factors for mortgages. If the DTI was tight before, it may now have crossed that threshold and become unworkable in this particular lending program,” Arlette said. “Consult with a financial professional and recalibrate not only expectations, but also qualifying parameters and see what other options are available.”
Arlette adds that now might be a good time to also lock in an interest rate, especially for those considering new construction or under contract for new construction.
“Then the next question is do they offer the float down, so if the market improves in their favor, then can they take advantage of that as well,” Arlette said.
But both Arlette and Hawthorne said now was not the time to panic and we shouldn’t see another housing slump like 2008.
“In 2008, if you had a pulse, you could get a loan. They were making over-indebted loans. People couldn’t afford to support them,” Hawthorne said.
“It was a combination of really dodgy lending and predatory lending practices. That’s not the case today. The sky isn’t falling. We’ve only just returned to a normal market environment,” said Arlette.
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