Selling a Los Angeles Home, it’s all About the Interest Rates

If you are a Los Angeles home seller and are waiting for prices to rise even more before thinking of putting your property on the market, think again.  Put yourself in the shoes to the Los Angeles home buyer.

Interest rates have started to rise.  Rates have increased between 0.75% and 1.00% from their lows a few weeks ago.

For example,  a 0.50% increase in rate equates to an increase in payments of $30 a month per $100,000 of loan amount, and a 1.00% increase equates an increase of $60 a month.

You can also calculate that a 0.25% increase in rate results in a decrease in borrowing power of $3,000 per $100,000 in loan amount.  That means the same payment you had on a $100,000 loan now will only be a $97,000 loan.  A 1.00% increase in rate results in a decrease in borrowing power of $12,000 per $100,000 in loan amount.

And to put it in terms of financing a $500,000 home with 20% down, the low end of property prices in Los Angeles, between now and the record low rates, it is going to cost and average of $240 more a month.

How long do you think buyers are going to be able to follow the market of rising home prices coupled with rising mortgage rates?  They are shortly going to be priced out of it.

So, if you are thinking of selling your Los Angeles home, and considering waiting for prices to rise.  Think again.  Sell while buyers can still afford to buy.

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