The new Sonoma County housing and mortgage rate market

The Sonoma County real estate market has changed considerably in the last few years. If you’re going to be purchasing or refinancing a house here is what you need to know…

The median house price in Sonoma County is $670,000 brought on by a few factors. Primarily, the Sonoma County housing market over the course of the last year has had very little supply of homes available on the marketplace. That, coupled with more consumer optimism has led to large demand driving housing prices higher creating more home equity for homeowners wishing to refinance or cash out for remodel projects. The historical wildfire in October 2017 has played a role as well furthering even more demand for housing.

Rates

Interest rates have risen sharply beginning at the tail end of January. It’s no surprise that these higher rates are a byproduct of a bigger stronger economy. Case in point rewind the clock a couple of years back to the year 2012 housing prices were extremely low as were interest rates and generally people were worried about potentially losing their jobs. The unemployment rate was high upwards of 8 + percent.

Fast forward to 2018 unemployment is extremely low, consumer optimism is high as is consumer confidence and more people are feeling optimistic about their overall financial well-being on the broader level. When people are feeling good about their financial profile they tend to spend. That spending has helped fuel a larger demand for housing driving housing prices up as well as being a catalyst for higher interest rates. The market today is high housing prices coupled interest rates in the middle to high 4’s.

Advice for home buyers
Get pre-approved with a local lender before going house hunting. On the bigger picture of things no one knows what’s going to happen with interest rates or housing prices moving forward and it’s virtually impossible to predict the next so-called crash. Compliance in the world of mortgage lending is incredibly strong and you still must show your ability to repay that mortgage. Waiting to purchase a house especially if rates continue to rise could end up costing you far more money in the bigger picture in terms of opportunity cost lost by paying higher rents or a higher interest rate on a mortgage if rates continue to rise.

If you’re trying to increase your borrowing power there’s only three ways to do that change loan programs, put more money down, pay off debt, get a cosigner or lower your purchase price point expectations.

Homeowners wishing to refinance
Gone are the days of sub 4% mortgage rates. Homeowners today should expect an interest rate in the middle to 4’s for 30-year fixed rate mortgages and low 4’s for 15-year fixed rate mortgages. If you took out your mortgage in the last few years, there is still a window of opportunity to drop mortgage insurance and refinance for example moving from an FHA loan into a conventional loan. The more common opportunities for refinancing would be to pay off debt, avoid a non-tax-deductible home equity line of credit or complete that long-overdue home Improvement project. Refinancing for getting a lower interest rate may not something the market supports if your current mortgage is 4.25% or lower. Most homeowners who were unable to do any refinancing in years past when housing prices are lower now more than likely have the equity needed to complete their financial goals.

Looking to get a mortgage or know your options? Begin with a hassle free quote now.

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