High Interest Rates Are Impacting St. Cloud Housing Market
The interest rates nationally have been on a steady increase and the St. Cloud area housing market is feeling the affects. Craig Ehrlichman from Premier Real Estate Services joined me on WJON. He indicates homes aren't selling as quickly as they were 6 months ago and sellers aren't likely to get the full asking price. Ehrlichman attributes this change in the market to the 7 1/2 to 8% interest rate. He says the market has slowed down where home sellers can expect their home to stay on the market for a approximately 90 days compared the less than 60 days that was expected 6 months ago.
Ehrlichman indicates Adjusted Rate Mortgages or ARMs are returning in a different form as an option for home buyers. He says these rates can lock in at lower interest rates in the 5% to 6% range for a 6 to 7 years before it adjusts. Ehrlichman explains these aren't the same mortgages that existed in 2007 or 2008 that led to the housing crisis. He says in the mid to late 2000s people were buying overextended and the house values weren't accurate. Ehrlichman explains there are some built in safeties so that type of problem doesn't happen for buyers anymore.
Even though the housing market for sellers isn't as good due to the interest rates Ehrlichman calls this more of a traditional market where potential buyers view the the home and can offer under the asking price without fear of a bidding war for these properties. He says the home seller is still getting 98% to 100% of the asking price.
Ehrlichman indicates he's had instances recently where there have been multiple bids for a home and all of the bids came in under asking price where just 2 to 3 months ago that would have driven the price of the home above asking price.
Listen to my conversation with Craig Ehrlichman below.