Homes on the Market Longer

Well, as rates have tended to be higher this year than for the last several years, homes are sitting on the market longer. Slowly but surely, these conditions are creating a tendency towards a buyers market in many areas of the country.

Rates are hovering lately. While they might go up or down a fraction of a percent, you are looking at about 6.5 percent for a 30 year FRM. A 15 year FRM will go for about 6.15 percent. A 5 year ARM will also go for about 6.15 percent -- so the differential between FRMs and ARMs is reducing. A one year ARM will go for about 5.6 percent -- so your best deal is the one year ARM, as long as you can tolerate the risk involved in having your rate adjust in one year.

These rates are part of the reason why houses are on the market longer. People are thinking a lot harder about moving. Further, their existing mortgage may be a much better deal than anything they could negotiate now, if they bought a new place. Not only that, but if your existing home is highly mortgaged, you don't want to sell now, since it could mean you'll go to the next home with little or no equity.

Personally, I'm still waiting for prices to drop a bit more. I think they are too high -- I'm not seeing value for the money right now. However, once the prices start to stabilize at a lower level, we'll be jumping back into the market. We need a bigger house, now that we've added baby #2.


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