matt, how many sf does your “smallish house” have? And how big is your lot?
And if you didn’t have “5 kids” or “baby mommas” in the future, would YOU stay put because you like your house and neighborhood?
Just wondering. Your answers may reveal you should just enjoy your 3.5% fixed rate mtg and don’t really need to be worrying about this.
As far as current borrowers with low mtg rates having a “disincentive” to “move-up” in the future, I don’t see it this way.
The way I see it, the buyer under these favorable rates bought the smaller house for a reason and, contrary to popular opinion, it probably wasn’t the price. It was because they wanted to be in a certain coveted or “hip” area and did not want to live in the stix or in a lower-income area such as Lemon Grove or Spring Valley, where they could have gotten a 5/2.5 with large garage/lot for the same or less amount of money. So the buyers buying “move-up” properties now are not necessarily “move-up” buyers. Due to the low interest rates, likely half are actually FTB’s stretching to buy a property which, under a more normal 6.5% to 7.5% fixed mtg market, would be out of their league. Many are doing so without full knowledge of the monthly cost of maintenance and utilities on such a property.
There are buyers who buy for location and/or charm/architectural details and then there are buyers who buy for purely size and/or “uniform look of a planned community.” However, these buyers are not typically one and the same person.
I have bought and sold several properties in my lifetime and never once did I pay any attention whatsoever to the prevailing mtg interest rates … not even when FHA was at 15.5%. We qualified for whatever we did and that was our shopping point. There are more than nine ways to skin a cat.
In other words, ALL interest-rate environments, and ESPECIALLY high interest-rate environments are GREAT for buying property!
