2013 Recap: Everybody Likes Roller Coasters
The following is a recent post from Scott Ractliffe's blog on the mortgage industry. You can read more at http://scottractliffe.com/.
Shrill screams of excitement are often heard as a roller coaster crests the high point and begins its rapid decent down an unbelievably steep track. Those same screams change to a different pitch when the ride enters a dark hole, and the twists and turns are unexpected and startling. That’s often when the terror sets in. And yet, every time, the coaster pops back into the daylight and slows into the station. The riders survive, and most often are ready for another go at it.
The mortgage market in 2013 was not unlike the best of roller coaster rides. But have we reached the station yet? Last January, with the 2012 holiday season behind us, 2013 began with 30 year fixed rates hovering around 3.375%. With wide smiles, mortgage professionals had never seen rates this low. And borrowers were enjoying the benefits as well. Our roller coaster had been in freefall, and the excitement was at a high point.
Then, as we made our way from early May to early June, we got a glimpse of things to come. Interest rates had risen from the 3.50% range to nearly 4.00%. And then, with consistent increases, to the 4.75% range by late August. Smiles waned a bit, and worry set in. We had certainly reached the dark part of the 2013 ride, and nobody knew when and where the next turn was…or if it would be a fun one. The Federal Reserve, which had been behind these historically low rates through the use of its bond and mortgage purchasing stimulus plan, finally came out with convincing comments in September stating that the stimulus would continue for the foreseeable future. Our ride popped back into the daylight, and rates dropped back down into the low 4’s by late November. Even though we’ve seen some recent slight increases in rates, we’re still seeing 30 year rates in the 4.50% range. As we near the end of 2013, with rates essentially 1% higher than January, this annual roller coaster is nearly over.
Nashville home prices have stabilized, and in most areas show signs of good appreciation. Inventories are presently low, which has created bidding wars in many cases. That has pushed home prices higher. It’s a matter of supply and demand.
If this past year has shown us anything, it’s a glimpse into the future. While nobody can say for sure, the most likely scenario for the spring of 2014 will be higher interest rates and higher home values. So is it a good time to buy or sell? Absolutely – either, or both. The spring will bring more inventory, and with it more competition for sellers. And projected increases in rates will raise the cost of financing for buyers. So don’t wait too long. The exhilarating part of the ride is about to begin again. And who knows when the next turn is coming, taking us back into scary uncertainty. Keep your seatbelt on – 2014 should be very interesting!
You can reach Scott Ractliffe at 615-743-6006 or Scott.Ractliffe@pnfp.com.
Tennessee Bankers Association
Pinnacle - Brentwood