Interest Rates Still at All Time Low
People buying homes in Danville, San Ramon area should not let the rise of interest rates derail them. Going from 3.5% to 4.5% and possibly 5% by year end is still historically low. The norm is between 6% and 7%. Without giving away my age, my real estate career started with interest rates as high as 13%. So any single digit interest rate is fantastic.
In 2004 the average interest rate was 5.75%. The average Danville home was $938,632 and 781 units were sold. In 2012 the average interest rate was 3.5% with 611 units sold at an average sales price of $918,421. As a comparison more homes were purchased in 2005, at a higher interest rate than 2012 and average sales prices were similar. The biggest difference is the monthly payment, with 20% down on a home priced at $938,632- 3.5% interest rate is a P&I of $3,574. The same priced house with a 5.74% is a P&I of $4,640.
San Ramon home sales for the same time frame had the same effect. With 841units sold in 2005; 5.74% interest rate; at an average price of $768,168. In 2012 the number of units was 717 with an average sales price of $746,783.
The lower interest rates allow buyers to get more home for their money. It is estimated that for every 1% raise in interest rates, purchasing power is decreased by 10%. If you are someone still “on the fence” about buying a home in Danville or San Ramon, it might be time to take the leap.
Tagged with: danville san ramon homes
Filed under: Market Data
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