It’s Getting Harder to Buy a Home & We’re Pumped About It
Written by Victor Etongwe, Cofounder at RemodelMate, a humble ventures startup that is rapidly raising the standards for the entire home improvement industry by making the process as a whole, more beneficial and pleasant for customers and contractors alike.
Nope, you didn’t read that wrong. It’s getting harder for people to purchase homes, and here at RemodelMate we are super excited about! The question is how in the world could a business that is designed to help people remodel their homes be excited about less people buying homes. Before I explain here is a quick history lesson. I promise I won’t bore you.
1985–2017 is a Long Time
Between 1985 through today interest rates have been insanely low. They’ve hovered around three to four percent. To give you context in 1981 interest rates were 18.5% which is more than 4x what they are today.
At 4% that means on average Americans are spending roughly 20% of their income on their mortgage payments which is phenomenal. In the DC area most homeowners and renters are paying about 37% on housing expenses. Having worked in the DC housing market I would argue if you're talking net income and not gross then that number is significantly higher, but who am I to argue with the Bureau of Labor & Statistics.
History Lesson Over
This low interest rate joy ride is slowly but steadily coming to an end. The Federal Reserve, the body that controls interest rates has decided that enough is enough America. Since, 2oo8 the FED has raised interest rates three times. Two of those hikes have been in the last three months, and it’s looking like theres another one on the horizon.
What it Means For You & I
If you’ve bought a house in the last decade, congrats to you, you won the interest rate lottery. If you haven’t bought a house, and you’re considering it, you’ve got a small window of opportunity before it really cost you. Finally, for those of us who haven’t purchased a home and have no plans to in the foreseeable future, be prepared to pay significantly more for that borrowed money.
If you’ve bought a house in the last decade, congrats to you, you won the interest rate lottery.
Why RemodelMate Can’t Wait For More Hikes!
As a business we view this trend as a major boon. As rates continue to go up, people who are already in their homes become more and more reluctant to leave. I’m sure at at this point you can see why. It’s just plain ole more expensive. So what happens next? They remodel and renovate their homes. (Shameless plug — www.remodelmate.com) Rather than moving to that bigger, newer, more modern home, people are inclined to turn there existing space into what they would have bought elsewhere. Obviously this is a trend we are anxious to see.
Opportunity At Every Junction
At first blush less people buying would seem like a very negative indicator, but as in most thing with life there’s a silver lining. If you are in a position to buy, now is the time, while interest rates are still historically low. If you’ve bought a home at a crazy low interest rate, and remodeling seems to be a good alternative to purchasing a brand new place, then head on over to www.remodelmate.com (more shamless plugs) to get started.
Am I wrong? Will interest rates stay low forever? Let me know your thoughts in the comments section.