USCTrojanCPA said:Homes sales in Jan. 2011 actually increased by over 17% from the same time last year (110 sales vs. 94 sales). Inventory levels have been essentially flat for the entire month of January, but you can bet they will be increasing once we move into the Spring. Then we have all the new home developments that will be popping up from Portola to Stonegate to Laguna Crossing. Prices still seem to be flat in January with home prices settling around what recent comps closed around. The big wild card will be what happens if interest rates on the 30-year mortgage cross into the 5s from the 4s. Currently we are on the edge of 4.875% and 5%. It'll be interesting to see what happens if rates creep into the mid-5s as we move into the Spring and Summer. Will builders start to throw incentives at perspective buyers to lure them in? Will sellers of re-sale homes begin to lower their prices as inventory and interest rates increase? It'll be very interesting to see what happens.
im curious to see the rate impact myself. I keep a spreadsheet of properties that interest me and the wife and i went back to run the payments that were previously calculated using 4.25% with current rates of 4.75% and the payment jumps 150-200/month. For those folks stretching themselves already its just going to make it that much tougher. It will exert downward pressure - IHO will try to convince us otherwise.