05/23/2019
SCHOOL IS OUT...So what does that mean to you? Clients are always asking me what I think about rates or home prices. Here's what I have been discussing with folks over the last couple of weeks. Enjoy!
It has been 32 years since I bought my first home and dived head first into the Real Estate industry. As a Mortgage Broker, I have learned many things, but the most important thing I have learned is that the Real Estate market has cycles and knowing how the market will behave puts you at an advantage when looking for that new home. I am about to reveal the next cycle to you, which by the way I have already done so with some of the clients that have maintained engaged and continue to work with my team, incredibly enough, the results are already evident and more people are getting under contract and on their way to purchase their first, their new or their dream home. Why, because it just makes sense to beat the crowd.
Before I reveal the next imminent cycle on the Real Estate Market, I need to point out a couple of factors for us of us in Central Florida, but specifically in the Orlando and Seminole County Markets.
In 2019 Orlando has been blessed to have the 2nd fastest growing economy in the country. This trend will continue for at least the next 10 years as Orlando's population continues to grow 20.3% Year over year. If you live or are interested in living in Central Florida, you need to know it is no longer all about Mickey and Disney World. It is no longer about the snow-birds looking for a few months away from the freezing temperatures of the northern states. There's real opportunity in Orlando for entrepreneurship and professional growth. UCF has taken over as the most populous University in the country. Orlando is the city with the second highest number of conventions per year, only trailing Las Vegas in that department. You are probably in awe of the number of hotels we have in Orlando, but what you may not know is we don't have enough capacity and we continue to build hotel and resorts. In fact, the world largest hotel is now being built in Clermont (about 8 minutes from the Animal Kingdom entrance). You probably also have heard of Lake Nona and the Medical City Corridor, yes it is nice and is giving birth to an amazing new city in Lake Nona, but that also comes with many high-level other services like the world largest accounting firm and law firms building new headquarters in Orlando. All this new development is bringing high-end jobs to the Magic City, which continues to fuel the notion of a very strong future economic outlook.
The second thing to consider as we get closer to revealing the next, but a very imminent trend in Real Estate, is the fact that everything reacts to the law of Supply and Demand. For the past 3 to 4 weeks, we have been enjoying 18th month low Mortgage Rates, and it is so much easier to qualify a new client and offer them these amazing low rates, but as the effects of the new Real Estate Cycle take place, you will notice rates going back up at least between 10 and 15% from the current offerings. Think about how significant this is, say right now you are offered a rate of 4.5% on your 30 Year Mortgage, in a few short weeks the same loan will be offered at 4.95%. Plug the numbers into a financial calculator, using a $300,000 and you have a difference of payment for Principal and Interest of $1,520.06 at 4.5% vs. $ 1,601.31 at 4.95%. Remember we only raised the offered rate 10%, but it could be worse. Over the course of the loan that represents a difference of $29,250 plus your opportunity cost (additional benefits you could have with the money saved). Why do we think rates are about to go up, we will reveal that in the next paragraph, but in simple terms, rates will go up because the demand for money will be far greater in a few weeks than it is now. Money, just like any other commodity is a finite product, hence the more people want to borrow, the more it will raise its cost, in our case, it will raise the rates. Although the Real Estate market is very busy in Orlando, it is about to be extremely busy over the next few weeks and I hope you follow my advice and get ahead of the curve. Lock your loan as soon as you have a chance.
Finally, we are now ready to reveal the next cycle change in the Orlando Real Estate market. Some of you may think this is very basic, but when Benjamin Franklyn discovered electricity, he too saw a basic event happening, a lightning bolt while flying a kite. So because the notion is basic, does not make it less important or impactful. Right now, if you put an offer to purchase a home, most likely you will be able to get your offer approved by the seller at asking price or maybe even with a reasonable discount from the asking price. That my friends, is about to change, in the next few weeks sellers will be receiving multiple offers on their homes and Realtors will advise them to counter offer higher or request a highest and best offer. You as the buyer will be competing again with other buyers for the same home and you will be encouraged by your Realtor to put an offer above asking price, hopefully, high enough to win the bid for the home you want. You may be thinking, not really, I just go and buy another home, but the same thing will happen no matter how many homes you try and bid and there's a very simple reason and explanation for that. You should have gotten the hint from the subject title of this post. School is out, what does that mean to you as a buyer in this Real Estate Market. Every year hundreds or thousands of families with children of school age move in and into Orlando and its surrounding neighborhoods. Families have been planning these moves because they want their kids to attend specific schools in Central Florida. With Seminole County having the best schools in the State, it is not surprising that every year, right after the school year ends, we get slammed with purchase business. This is a very strategic move for parents and they have been planning it for years, while their kids finished elementary school, they planned to move into a home with the right intermediate school and then they plan to move into a neighborhood with the high school of their preference. Easy, checkmate! The end result is prices of homes increase as there's just not enough inventory, so here we go again with the laws of supply and demand. The combination of higher prices and higher rates can now cost you an extra 20% in housing since earlier we calculated a 10% increase was costing close to $30,000 on a loan of $300,000, then 20% is costing you $60,000 over the course of the loan, plus the opportunity cost.
I really hope you find this information helpful, and that it helps you get ahead of the curve, there's still time to beat the cycle, but you need to act fast. I am enjoying my busiest time of the year, but I am always available for consultations and to review your individual situation. Best number to reach me is 407-970-3814
