J. Kent Erickson, Broker Associate
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Will an Increase in Interest Rates Crush Home Prices?

Posted by on Jan 26, 2015 in Buying a Home, Selling a Home | 0 comments

There are some who are calling for a substantial drop in home prices should mortgage interest rates begin to rise rapidly. Intuitively that makes sense. The cost of a home is determined by the price of the home and the price of financing that home. If mortgage interest rates increase, less people will be able to buy. The logic says prices will fall if demand decreases. However, history shows us that this has not been the case the last four times mortgage interest rates dramatically increased. Here is a graph showing what actually did happen:     We will have to wait and see what happens as we move forward. But, a fall in prices should rates go up is not...

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Either Way, You’re Still Paying a Mortgage

Posted by on Jan 21, 2015 in Uncategorized | 0 comments

There are some people that have not purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage – either your mortgage or your landlord’s. As a paper from the Joint Center for Housing Studies at Harvard University explains:  “Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.” Also, if you purchase with a 30-year fixed rate mortgage, your ‘housing expense’ is locked in over the thirty years for the most part....

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Where Are Prices Headed Over the Next 5 Years?

Posted by on Jan 13, 2015 in Buying a Home, Real Estate Market, Selling a Home | 0 comments

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.   The results of their latest survey Home values will appreciate by 4.8% in 2014. The cumulative appreciation will be 23.5% by 2019. That means the average annual appreciation will be 3.6% over the next 5 years. Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 15.1% by 2019. Individual opinions make headlines. We believe the survey is a fairer depiction of future...

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Buying a Home Remains 38% Less Expensive than Renting!

Posted by on Jan 5, 2015 in Buying a Home, Selling a Home | 0 comments

In Trulia’s latest Rent vs. Buy Report, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage throughout the 100 largest metro areas in the United States. The updated numbers actually show that the range is from an average of 17% in Honolulu, all the way to 63% in Detroit, and 38% Nationwide! This is up from an average of only 5% cheaper in Honolulu in April. The other interesting findings in the report include: Rents have continued to increase nationally even as home price increases are starting to slow. Current low mortgage rates have kept homeownership from becoming more expensive than renting. Some markets might tip in favor of renting next year if home prices increase at a greater rate than rents and if – as most economists expect – mortgage rates rise, due to...

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