Median Sales Price Increases $23,000. Monthly Payment Increases $3. Wait! What??

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Median Sales Price Increases $23,000. Monthly Payment Increases $3. Wait! What??
By Scott Rogers • November 13, 2020 Filed In: buying, financing, opportunity
Yes, you read that correctly. Over the past year... The median sales price has increased by $23,000. The associated monthly payment has increased by $3. Oh, the magic and mystery of declining mortgage interest rates! :-) Over the past year we have seen a rather rapid increase in home prices. The median sales price in Harrisonburg and Rockingham County one year ago was $217,000. Today, it is $240,000. This is an 11% increase in the median sales price over the course of 12 months which is a much faster than normal increase. And yet, if a buyer finances 80% of the purchase price, their mortgage payment will only be $3 per month higher than it would have been a year ago. Wait! What?? That's all thanks to ridiculously low mortgage interest rates! One year ago the average mortgage interest rate was 3.78%. Today's average mortgage interest rate is 2.81% -- which is 26% lower than the rate from a year ago. So, if you're surprised that a buyer today is willing and able to pay 11% more for a house than they were a year ago -- don't be! Most buyers are financing their home purchases, and thanks to today's low mortgage interest rates, they are still paying basically the same amount as a monthly payment now as they would have been a year ago. Put slightly differently... A year ago, Fred was working in a job that paid him $X per year, which allowed him to afford a mortgage payment of around $1,000 per month, which allowed him to purchase a median priced home of $217,000. Today, Fred's cousin, Ted, is working in a job that pays him $X per year (the same amount as Fred), which allows him to afford a mortgage payment of around $1,000 per month, which allows him to purchase a median priced home of $240,000. Pretty wild. Now, if (when!) those mortgage interest rates start rising -- then the cost of housing will start to increase -- though that's what we generally expect it to do. Receive updates from HarrisonburgHousingToday.com via e-mail: Enter your e-mail address: Recent Articles: Area Wide Sale On Houses On Day After Thanksgiving! As A Home Seller, You Are Always Optimizing For Something Increasing Home Sales Despite Declining Inventory Levels Homes Usually Go Under Contract More Slowly In The Winter, But Maybe Not This Year? It Is Hard For Home Buyers To Compete If They Have A Small Downpayment Or If They Need Closing Cost Assistance Make A Decision About A Home Warranty Purchase After Your Home Inspection How High Will You Go When Competing With Other Buyers? Overbrook Subdivision in McGaheysville, Virginia Slated to Expand To A Total of 230 Homes Mortgage Interest Rates Will Never Be This Low Again, I Said Countless Times In Recent Years
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 25, 2020 (unless otherwise noted).
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