The Barrington real estate market is never immune to national changes in the industry but real estate is local, always has been and always will be. Mortgage interest rates fell to historic lows fueling a slow but steady recovery to real estate markets everywhere. The questions on Barrington homeowners minds are:
- Now that mortgage rates are rising will that impact the Barrington real estate market?
- When will I see positive equity in my home value rather than negative equity?
Rising Mortgage Rates Are not Impacting Barrington Real Estate Sales
Mortgage rates may be on the rise from rock bottom, in fact they are fluctuating a little but the reality is the rates are still low, very low. Barrington is an affluent community and larger down payments are the norm here. Many homes in Barrington are bought with cash or low percentage mortgages. I have seen no discernible effect due to the fluctuating mortgage rates. In short the rates are still under 5% and any small changes are having no effect on the Barrington real estate market. Average marketing times continue to fall, inventory is declining, home sellers are coming to the market.
Mortgages are becoming easier to obtain with Wells Fargo, one of the largest residential lenders, tiptoeing back into the sub prime market. Loans are available for re-sales, new construction and even the secondary property markets. 20% down payments are not mandatory, there are workable options for 80% and 10% loans again, and FHA requires even less. In short the mortgage market is allowing buyers to move up the ladder, freeing up inventory for the buyers and relocating buyers to choose from.
Barrington Home Sales Numbers First Quarter 2013 and 2014
Homes in Barrington are selling, last year had the highest volume of sales in a very long while. 2014 continues at a good pace. The first quarter of 2013 saw 121 homes closed, in 2014 it was 116.
Negative Equity to Positive Equity
Although many Barrington home owners never went into negative equity, everyone lost value. Value is slowly climbing again, with the upper quartile even beginning to sell again. It’s a domino effect, increasing values start at the bottom and slowly work their way up to the top. The law of supply and demand applies to Barrington real estate is it does everywhere in the nation. While other real estate markets are firmly in a sellers market, Barrington isn’t there yet. We are however more balanced than we have been for a very long while. The upper quartile here will always be more a buyers market, the demand for extremely high price properties will always be limited. Our prices go to $15 million.
As values increase, equity will return, slowly wiping away negative equity. However we lost over 10 years of home value and it might take a while to wipe it all away. Those home owners that had high percentage mortgages will not suddenly gain enough value to have positive equity right away, indeed it might take a few years. It was a very tough pill to swallow. According to Corelogic, nationwide roughly 6.5 million homes (or about 13.3 percent of all mortgaged homes in the country), still had negative equity by the end of 2013.
Foreclosures and Short Sales
Barrington real estate was not immune to distressed property sales. However short sales and foreclosures topped out at about 15% of the Barrington property market. Distressed sales are falling and are not as widely available. They’ll never go away but I expect it to fall back to the 2% we used to see, in time.
Price It Right and Get Selling
In summary Barrington home sellers are in a much better place and the movement in interest rates will not have any detrimental effect on your sale at least for the foreseeable future.
- Pay more attention to location, curb appeal and condition when pricing your home.
- If you’ve been on the market longer than the average for your village, like it or not you need a price adjustment downwards.
- Don’t over price your home based on what national real estate news says, we’re local.
- Testing a high price nearly always leads to less than you would get if you priced right from the start.
- Know the average marketing time for your area and price point.
Read more on selling homes with our tips and insights. For an up to date list of interest rates contact a few lenders.