Buying a home requires divided attention, with would-be purchasers keeping up with their Realtor, lender, insurance agent, home inspector, termite man, even their potential future neighbors.
An additional group currently sits on the list: the Federal Reserve Board.
The Federal Reserve recently broached the idea of rolling back the economic stimulus initiatives that sent 30-year fixed mortgage rates well below 4 percent for the better part of the last year. The resulting rate uptick — 4.5 percent as of Monday — has and will continue to impact the Savannah-area housing market, local real estate insiders say.
The fallout has been mixed: Some would-be buyers have moved quickly to enter or close deals for fears that rates will continue to rise; others have backed off with hopes rates will go back down; still others have forged ahead in order to complete their purchase while school is out.
“I’ve never seen more buyers and sellers and people in the industry watching the Federal Reserve than are right now,” said Michael Caputo, a loan officer with Starkey Mortgage. “But then every 1 percent increase in rate translates to a 10 percent impact on purchasing power. You can understand why everybody is talking about rates.”
Rates began a steady rise off historical lows in early May, topping out at 4.73 percent the last week of June. The rate soared in conjunction with conversations among Federal Reserve Board members about the possibility of ending a mortgage bond-buying program by the end of this year.
The bond-buying initiatives are the major tool the Fed has used to hold down interest rates.
“No matter which way rates go, we’re still going to see sales at a good pace here,” said Donna Davis, president of the Savannah Area Board of Realtors. “There were 30-year mortgages out there right at 3 percent. It was crazy — wonderfully crazy, but crazy.”
The rate volatility had little impact on June home sales. The Savannah-area enjoyed a calendar year high for closings in the month. Most of the buyers of those 468 homes, however, locked in their mortgage rates before rates broached the 4 percent plateau.
A better indicator of the mortgage rate change impact, Realtors say, will be July and August sales. A year ago, sales were steady throughout the summer months, with 471 sales in June 2012, 444 in July 2012 and 468 in August 2012.
This summer could prove less consistent, although Caputo noted there is no sense of a “negative vibe” with the market.
“Everything is still popping. We are back to getting multiple offers on properties,” said Vickie Linscott, a Realtor with Keller Williams Coastal Area Partners. “If sales can hold constant through the end of this month, we’re looking good for the summer.”
The mortgage rate situation resonates most with new home construction. New homes take four to six months to build, and rates can range widely during that period. June saw a jump in contract activity for new homes in Effingham County, as well as western Chatham County.
The rate changes contributed “to a mentality that it is better to buy now than to wait,” said Mark Konter, president of the Home Builders Association of Greater Savannah.
BREAKOUT
Local Home Sales Snapshot
The Savannah-area housing market (Chatham, Bryan and Effingham counties) hit calendar year highs for sales in June. A look at the local market (numbers include residential real estate, including single-family homes, modulars, townhomes and condominiums):
Month |Inventory |New |Sales |Pending |Price
June 2013 |3,897 |710 |469 |298 |$213,723
May 2013 |3,586 |711 |447 |290 |$223,917
April 2013 |3,893 |739 |447 |350 |$201,881
March 2013 |3,019 |542 |379 |324 |$200,578
February 2013 |3,668 |555 |290 |234 |$186,014
January 2013 |3,871 |641 |302 |274 |$176,276
December 2012 |3,139 |380 |372 |163 |$171,651
November 2012 |3,272 |481 |383 |220 |$209,104
October 2012 |3,424 |710 |388 |242 |$188,796
September 2012 |3,298 |509 |333 |242 |$188,600
August 2012 |3,477 |638 |468 |223 |$191,063
July 2012 |3,460 |610 |444 |278 |$221,061
June 2013 |3,897 |710 |469 |298 |$213,723
June 2012 |3,630 |649 |471 |283 |$198,998
June 2011 |4,506 |698 |405 |268 |$200,910
June 2010 |5,432 |721 |373 |207 |$214,767
June 2009 |5,526 |721 |323 |215 |$217,219
Source: Savannah Multi-List Corp.