Assessed Valuations

Here’s a question we hear from customers quite often: When will rates go up and what happens when they do? We know that rates can’t stay this low forever, so what can we expect in the future?

Answer: My dad used to tell me, “if something sounds too good to be true, it probably is!” Rates today are half of their long-term average. Money is on sale! Fiscal policy in place to stimulate the economy has caused artificially-low rates. It simply can’t go on. An economic truth is that all markets seek balance over time. Many experts predict that as soon as this fall we will see the Fed raise rates. Most predict mortgage rates to be 1% higher a year from now. So what does that mean? It means that both buyers and sellers will experience an effective 10% price increase. Every 1% rise in rates equates to a 10% rise in monthly payment. The problem for the buyer is obvious, they need to set their sights 10% lower. The problem for the seller is that they have fewer buyers who can qualify for their house. Higher rates will mean that our market cools off and price increases go from double-digit increases to single digit. History tells us that we won’t see a significant downturn. Even in the Great Recession prices only dropped 2.5%. Our market will continue to thrive, just at a more reasonable pace. For a detailed report on rates and prices contact us at fortcollins@windermere.com or call 970-460-3033.

Eric Thompson, President
Windermere Services Colorado
970-232-4364
www.windermere.com