As we weather the current Hitlon Head Real Estate market, there are three essential principles we can count on for the future.

1. Inflation leads to higher interest rates
2. Houses are selling
3. If you’re a seller, it’s time to cut your price and be decisive; if you’re a buyer, it’s time to purchase or miss out on the opportunity

While the U.S. and global economy are recovering from recession, rates will likely stay low; but when things turn most economists believe that interest rates will be increased aggressively to combat inflation caused by record government spending packages. According to the National Association of Realtors®, the U.S. is currently in position to sell 4.8 million homes this year. That would put 2009 within the top 5% of homes sold in U.S. history. While many of these home sales are distressed sales (foreclosures and short sales) there are still a large number of purchases made on non-distress properties. Regardless all transactions still buyers and sellers in the market. If you’re a seller, it’s time to cut your price and be decisive; if you’re a buyer, it’s time to purchase or miss out on the opportunity.

• Buyers – don’t make the mistake of waiting for everybody else to make a move before you feel comfortable enough to purchase. The Housing Affordability Index is at the highest affordability in history. For the first quarter of 2009, the Housing Affordability Index hit 172.5. This means that a typical household earning the median family income would have 172% of the income necessary to purchase a median-priced existing single-family home with a 20% down payment. Many people have made a purchase decision already. Understand that we never know what the bottom of the market is until it has passed. Here’s one thing you can take to the bank – higher interest rates are the equivalent of a price increase and less affordability.
• Sellers – if you’re serious about selling your property, adjust your price to where the market is moving, take your lumps and move on, or you’ll be waiting a long time.

Look at the difference that just a 1% point increase can make on a $250,000 / 30 year fixed loan’s monthly payment: Interest Rate Monthly Payment 5% $1,342 6% $1,499 7% $1,663 An increase from 5% to 7% is the equivalent as a 20% price increase!