Market and Mortgages
Market and Mortgages
As a Realtor, on a weekly basis, I get asked about the market and mortgages. If you live in Davidson or Williamson County, TN like I do, you live in a HOT real estate market. If you live in the United States of America, you live in an area with historically low mortgage rates.
There are several factors to gauge if you live in a hot market.
- Population increases or decreases
- Average income levels
- Major employers moving into or out of the area
- Employment/unemployment levels
- Availability of housing
- Local tax rates
- Local building and zoning restrictions
In Middle Tennessee, we are experiencing a large increase in population. We have no state income tax which makes it a very attractive place for businesses and individuals alike. These, along with the rest of the factors above are why we live in a hot real estate market. A hot real estate market is a Seller’s market. Sellers have the upper hand in negotiations, for the most part. There are typically not enough houses for sale to keep up with the demand of the number of buyers in the market and multiple offers and bidding wars are more common. A Seller’s market is defined as having less than 6 months inventory of properties.
With regard to mortgages, this can definitely be a factor for a hot or cold market. Our interest rates are currently very low. When there is a threat of a rate increase, that can cause a neutral market to become hot because people want to buy while the rates are low. You may qualify for a $400,000 house today but if the rates increase, you may only qualify for $375,000. When we do get a threat of an increase, I hear a lot of people complain about what will happen. Well, people will still buy and sell property. People will still need more space, less space, get jobs, lose jobs, and even die. I think this chart is an interesting way to show rate history, and to appreciate where we are today.
So, do not worry about what kind of market you’re in or what mortgage rates are doing. If you can take advantage of a great market and a fantastic rate, go for it. If not, it is a cycle and people will always need to buy and people will always need to sell.
Photo courtesy of Stuart Miles via freedigitalphotos.net
Michelle Froedge is a residential Realtor and Principal Broker in the Greater Nashville and Williamson County areas of Tennessee. “Mom” to four-legged fur babies, Tyler and Livvie, Auntie to Zelamie, she is a vegetarian and sings in her spare time. Michelle has lived in Nashville and Franklin since 1997 and has been selling homes since 2004.