By Mike Bodeen · 4 April 2022
Happy Spring Monday! The NCAA Championship Game is this evening. I don’t have a dog in this fight, but I do love great basketball, especially if there’s last quarter dramatics😊
I’m also loving our chamber of commerce 85-degree temps. In April of 1994, my wife and I were asked to visit friends from the Truckee/Tahoe California area who had bought a home in Scottsdale. It also coincided with our 10-year wedding anniversary. We weighed the options: 25 degrees and snowing in Truckee, vs 80 degrees and sunny in Scottsdale. And they said, “Oh, and bring your swimsuit.” SOLD! We became Scottsdale residents later that same year.
There was an article in the Arizona Republic yesterday, written by a USA Today writer, Swapna Venugopal Ramaswamy. This article’s title was “Lock in Mortgage Rate Now.” In the article the writer mentioned that rates were 4.2%, week ending March 17th. In just over two weeks, the rate has gone to almost 5%.
FYI: Today’s Mortgage Rates from NextAdvisor: (https://time.com/nextadvisor/mortgages/daily-rates/mortgage-rates-today-april-4-2022/)
30-year mortgage rate: 4.91%
The average 20-year fixed-rate mortgage currently sits at 4.88%
Today’s 15-year fixed mortgage rate is 4.07%
10-year fixed mortgage rates are averaging 3.99%
Today’s average 5/1 adjustable-mortgage rate is 3.34%
Our advice? Even though the rates are near 5%, if you’re buying a home, yes, you should lock in the rate. Rates move according to long term risk. If you believe in the next few weeks/months that inflation will persist, then rates will probably not back down, and would continue higher. If the price of oil steadily drops, that would help lower inflation which would help lower rates.
The article mentions that now would be a good time to refinance. That would of course depend on what your current rate is. There’s a large cost to refi. I would be pretty surprised that someone’s rate would be at 5% or more and they had not already refinanced.
Inventory Rising? Yes, but will it make a difference?
Active listings for sale in the Arizona Regional Multiple Listing Service have increased over 13% in the past few weeks. (See Chart) Listings are still, however, painfully low. The combination of higher mortgage rates and higher prices may be combining to turn the tide.
Will it make a difference for buyers? Not in the near term. It may help alleviate the number of offers that might come in, but it will take awhile for it to have a noticeable effect for buyers.
One Home’s Incredible History
The Cromford Report recently reported on a very interesting individual home located in Desert Ridge that has sold 10 times since it was built in 1998. That’s a lot. My first thought was, “is the place haunted?”
Rather than regurgitate the story, I’m just going to copy the pertinent part here:
Originally built in 1998 by Shea Homes and sold that year for $189,468, it has had 10 owners since that date, its most recent sale being for $707,500 in 2021 . The most interesting sales were the last 4:
Purchased by Zillow in 2019 for $512,500
Purchased by a new homeowner in 2020 for $453,000
Purchased by Opendoor just 7 months later for $778,400
Purchased by another new homeowner in 2021 for $707,500
So, Buyer #2 above managed to make a gross profit of $325,400 after owning the home for just 7 months. That’s quite some flip. In contrast, Zillow managed to lose $59,500 (12%) on a home they owned for 10 months, while Opendoor managed to lose $70,900 (9%) on a home they owned for 4 months.
Hmm. No wonder Zillow tanked and left the home buying business and Opendoor lost hundreds of millions of dollars last year in their purchasing endeavors.
Have a really blessed week!
Market data referenced in this article comes from The Cromford Report.