Reports earlier this year from ABC 10 News reported that the average mortgage rates have increased by 4.57%. Since May of this year, the average mortgage rate has increased by almost a full percentage point. It appears as if the cause of the increase is due to a combination of factors, including Federal Reserve rates, the government’s decision to buy up bonds in the market, and from an expected growth of 2.5% through the end of 2013.
Although the mortgage rate is still low by historic standards, the increases in the interest rate could slow the housing economy recovery. This is especially disturbing as it was a bubble and crash in the housing market that lead to the economic recession and spiral of 2008.
For most people the increase in the mortgage rate won’t be felt immediately, but it will have effects in the North San Diego Country Real Property Management industry. To begin with it will mean that more people won’t be able to afford mortgages causing an increase in potential tenants seeking housing. Further it means that the market will shift toward a renter’s market versus toward the tenant.
Further consequences could be that real property owners will purchase property at higher rates. The cost for rent will increase as the cost is pushed onto the potential tenant. This is not something that property owners inherently want to do, as they understand the competitive nature of the industry: if prices are too high then properties sit fallow, if the price is too low then no profit or revenue can be earned on the investment to maintain property value and living conditions. This can ultimately equate into higher costs of living, especially for tenants and renters as the market adjusts to not only an increase in potential tenants, but also an increase in potential rent prices.
At Real Property Management we understand that the economy is still struggling to return to normal and that the political antics of Washington only add to the general instability of the economic recovery. We collaborate with both tenants and property owners to provide the best locations at the best prices to the benefit of everyone involved.