For the past several years, mortgage interest rates have been at historic lows. However, since the U.S. fall election, they are on the rise and the FED is projecting we will see more increases to come this year. Pre-election, the average rate of a 30-year-fixed rate mortgage was about 3.57% and today it’s about 4.25% for the same loan. For a $200,000 home with 3% down ($6,000), that’s a $76 increase in your monthly payment. Though rates are still at one of the lowest levels in history, waiting for them to get lower is a gamble as just a 1% rate increase would likely put many buyers out of the market. That 1% increase translates to about a $35,000 loss of purchasing power! That’s the difference between an extra bedroom, bathroom, or even an entirely different zip code!
Today, the median price in Jackson County is $246,950, which is up 8.3% from $227,950 last year and up 71.5% from 2012’s median price of $144,000. Locally, according to the latest Jackson County Residential Statistics, we continue to see prices on the rise:
- Northwest Medford: up 3.8% median price $192,000
- East Medford: up 7.4% median price $273,400
- SW Medford: up 0.9% median price $220,000
- West Medford: up 13.7% median price $174,000
In addition, we have about a two month’s supply of inventory available for Buyers which equates to 23.7% fewer homes to sell compared to last year. This has resulted in price increases and the need for more affordable housing.
On a national scale, U.S. home prices grew at 7.1 percent between November 2015 and November 2016. Though strong, home value remains 4.1 percent below the 2006 peak (on average, adjusted for inflation). Millennials (who will make up about 40% of first-time home buyers in 2017), will mostly be impacted by this change as they are faced with student debt and less options to choose from.
Though these higher rates may impact the demand for housing, the dynamics of supply-and-demand kick in, thus supporting the higher home prices. With new construction on the rise and new home sales in East Medford up 8.8% and 0.3% in SW Medford, it’s good to see more homes are being built to support our growing community.