Pretty Good vs “Hot” Real Estate

In looking at recent trends in real estate, we wondered, how Pretty Good Louisville (#59 out of 100 top real estate markets) is doing compared to a formerly “hot” market, like say, Ogden, Utah (#10). Short story: Pretty Good ain’t all that bad! Read on to learn more.

In Ogden, the average home price has climbed steadily for years until May 31, 2022 when it topped out at $537,215. From there until October 31, the average home price has dropped 3.7%. It was during May that average mortgage rates pushed past 5% helping to cool that market.

In Louisville, prices are not nearly as inflated as in Ogden and consequently there has yet to be a dip in the average sale price. Since rates went above 5% in May, the average sale price in Louisville has risen 2.8% to $243,782. Good if you are a seller. A little harder if you are a buyer. But consider, the average home in Louisville costs only half that of the average home in Ogden!

Also, the industry has at least two ways detailed below to help deal with what we all hope is a short-lived jump in interest rates.

Traditional banks, in addition to their conventional fixed rate 10, 20 or 30-year loans, can make adjustable rate mortgage (ARM) loans of 5 to 7 years or more with the monthly payment equivalent to that for a 30-year amortization schedule. At the end of the term the loan comes due or may be recast. The rates on an ARM are typically lower than a conventional 30-year fixed rate mortgage. If you are confident that either 1) you will sell before your ARM comes due or 2) rates will be lower when it does come due and you can refinance, this is for you.

However, if you feel you may be in the home longer than the term of an ARM or that rates may continue to go up, mortgage companies offer temporary rate buy-down programs over 2 or 3 years. After that, if rates have dropped, you can refinance or, if they’ve gone up, you’re protected from the increase. On a $400,000 home, the rate buy-down can reduce monthly payments in the first year from about $2,400 to just $1,700. If you can get a seller to fund the rate buy-down in lieu of a price reduction, this makes a much bigger difference in monthly payments than just getting a lower sale price.

A look at interest rates over the last 30 years at this link may help you decide which option feels best to you. To check out average home prices in other top 100 markets click here. If you’d like to learn more, call us anytime, our numbers are below. Welcome to the New Year.