People are surprised to learn fixed interest rates are at or below 4% for 30 yr mortgages. Because of this there has been a refinance boom which should throw some disposable income back into the economy. It did the last time we had a refinance boom. Not everyone can take advantage of this bonanza though as some are upside down on their mortgage. Owners might be happy to know there is a government program that allows homeowners to refinance even if their first mortgage is up to 120% of current value, and if you have a second mortgage or equity line it can be subordinated to the 1st. All good news if your rate is 6% or higher. It’s possible good news even if your rate is in the 5%+ range depending on the home value. Check with your lender for details.
Getting back to the main subject of this article, buyers today can now afford more home than ever before. The reason is simple. A home’s cost has several elements, and the two primary elements are sales price and financing costs. As you can see from the year end sales prices our median home values have dropped dramatically and at the end of 2010 year end average prices were approximately even with 1997 prices.
Everyone rushed to buy in 2005 when in fact they should be rushing today. Prices have moved upward a bit and when year end prices are posted for 2011 they will show an upward trend. Bottom line is they’re still a far cry from the peak in 2005.
Look at the average 30 yr interest rate chart. Back in October 2006 rates were approximately 6.36%. Today rates are around 4%. That’s a difference of about 2.36%. A $200,000 mortgage this year would be roughly $300 cheaper than it was 5 years ago. This fact alone makes housing much more affordable. Combining the lowest rates we’ve seen on record with deep price reductions in our market, it’s no wonder why this is the best time in years to purchase a property. Much thanks to Keith Cloak from Summit Home Mortgage for pointing out these historical rates to me.
The nation’s economy has been stalled for years. Locally our market was hit first, and hard. Because of that our market may be poised to recover sooner. Tourism may get a shot in the arm if the proposed $1 Billion casino is approved at the Forum. This would put Florida on the map for additional tourism and the all important convention and trade show business. We would have our gorgeous Sanibel and Fort Myers beaches, year round sunshine, and now convention business attracting tourism to our area.
I spoke to Lee County sheriff Mike Scott the other day about his thoughts on the casino. Those against bringing gambling to Florida argue it brings crime and detracts from the family atmosphere Florida is known for. Sheriff Scott doesn’t believe a casino would bring crime from a law enforcement standpoint. Judging from my visits to Las Vegas or a seminar I attended in AZ at a casino on an Indian reservation, I don’t necessarily buy into increased crime either.
I do see this as an opportunity to add $1 Billion in construction at a time when our area desperately needs it. I also realize we have gambling in Florida at Indian reservations, so I wonder why the state can’t capture some of that revenue too. Lord knows our state needs the revenue as well. Primarily I think about what increased tourism, conventions, trade shows, and visitors who might extend their stay a few days because Florida has so much more to offer than Las Vegas. Vegas has gambling, but we have beaches, Disney, water sports, nature, and so much more. I can envision vacationers choosing to come here instead of Vegas or Gulf Port MS, or even places like Branson MO.
With housing affordability in SW Florida at all time highs, home prices on the rise which will settle people who may be afraid if now is the time to buy, and a possible economic jolt to our economy, it sure is exciting to live in SW Florida.
Check out what Fort Myers Beach and Sanibel Island have to offer you.