You have options to safeguard yourself from fluctuating rates.

The Federal Reserve has increased rates multiple times this year so far and will continue to do so throughout 2022. That means if you’re in the process of buying a home, the rate your lender quotes could increase sometime in the future. So what happens if interest rates increase after you’ve already gone under contract? Is there any way to protect yourself?

First of all, when we’re writing an offer with a financing contingency, we typically determine whether your rate is fixed or variable and what terms would allow you to cancel the contract. In a rising market like this, you should get a mortgage rate lock as soon as possible in the process to prevent your rate from increasing further. Some lenders have products that let you lock before your offer gets accepted, but you may have to pay a higher interest rate to do this.


“Float-down options typically come with an extra cost in exchange for a lower rate.” 


Second, ask your lender if they provide float-down options, which prevent your rate from rising but allow it to lower if market rates begin to fall again. Be advised, though, that float-down options typically come with an extra cost in exchange for a lower rate. 

If you have any questions or would like to learn more about mortgage rate locks and float-down options, don’t hesitate to give me a call or send an email. I’d be happy to help you.

An update on the Madison housing market and what it means for you.  

The national housing market is changing drastically—so what does that mean for local markets? Today I have an update on the market specifically in the Madison, Wisconsin, area. Overall, we have seen days on market, prices, and inventory increase, but the number of showings has decreased. 

One huge thing is that rising interest rates have put pressure on affordability. Every 1% increase in interest rates raises your monthly payment by about 10%. Plus, rising prices aren’t just affecting real estate; the cost of groceries and gas are climbing too. This means the cost of living is going up, which is putting a strain on many buyers’ affordability. 

Secondly, there are around three weeks of available inventory in our area, which is more than just a few months ago. However, even though inventory is rising, it’s still historically low—a balanced market has about six months of inventory. Between this and the rising costs, it is clear that we are still in a seller’s market. 

If you want more information about what the market is doing now, or if you’re thinking of buying or selling a home, please reach out to me by phone call or email. I’d love to chat with you and discuss the specifics of your situation! 


2018 is almost here. How is our market expected to change?
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What’s happening in our market right now, and what can we expect from the market in 2018?

First, let’s start off with the number of homes that are currently available in our area. Currently, we have less than 1.5 months of supply in terms of both condos and single-family homes. This means we’re in a seller’s market at the moment (brief explanation: a balanced market is about 6 months of available homes at the rate of sale using the average of the past 12 months. In a “balanced” market supply and demand are similar and neither buyer nor seller are advantaged).

Note: We will likely see a drop even further in available homes in Dane county in early January as December usually experiences the largest number of expiring property listings and sellers think that it’s best to wait until early summer “when all the sales are occurring”… see below for the truth on when the most buyers and sellers strike an agreement (or accepted offer).  Also it’s worth mentioning that in most years December 31st has the largest number of properties listings that expire.

Since it’s the holiday season, some sellers take their homes off the market and there is normally a decrease in demand. All the holiday festivities and end-of-year deadlines tend to leave little time to get your home ready to show or for looking for a new home… not to mention the lack of warmth outside. The bright side: buyers that are out touring homes during the holidays are typically very serious about their home search.

The fact still remains that in December there are typically fewer accepted offers than any other month. In most cases we recommend that sellers allow showings if possible.

Nevertheless, the market is expected to continue favoring sellers into 2018.


The market is expected to continue favoring sellers into 2018.


The number of accepted offers ramps up over the next few months, with April typically seeing the most. March and May are also great months for this. Once an offer is accepted it usually takes around 45 days or so to get through the inspections and financing and to the closing table… June normally has the most closings of any month in a typical year. The main reason? Many sellers and buyers wait to close their sale until the conclusion of the school year.

Let’s move on to interest rates. Today, local lenders are reporting their interest rates are at 3.875% for a 30-year fixed mortgage. Experts do say, though, to expect a 4.5% rate by the end of 2018.

Overall, the 2018 market should be similar to what we saw this past year. In short, we expect to see too few houses for too many buyers. With demand high and supply low we may very well see additional upward pressure on pricing for homes in Madison, WI and Dane county. If (when) interest rates increase, they will remain near historic lows which has advantages for both buyers and sellers.  Especially if that seller is now buying and financing a portion of their new home.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

What’s going on in the real estate market right now? Inventory is tight and prices are on the rise, but all hope is not lost for buying a home.


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What’s going on in the market here in Dane County?

Interest rates are still bouncing around near historic lows and we’re still short on inventory, so sellers continue to have a big advantage with median home prices skyrocketing. The number of sales has decreased due to the low inventory; April saw the fewest same-month home sales we’ve seen since 2014 and was also lower than 2012. May data shows more of the same.

Too many buyers for too few listings.

A seller’s market is typically categorized as having less than six months of housing supply for purchase and in a buyer’s market, there is above six months. A healthy market has right around six months of inventory. Currently in Dane County, we have less than two months of supply. Homes sales that closed in the last 30 days went from being listed to accepted offers in an average of just about 35 days.


April and May saw the fewest same-month home sales we’ve seen since 2014.


In the Madison area, there is less than 1.5 months of supply currently available. The average days on market for homes closed in the last 30 days is even less than the Dane County average at just 27 days.

So what does this all mean?

If you’ve thought about selling your house, it doesn’t look like there’s ever been a better time. At the risk of sounding like I’m double talking, it’s still a great time to buy a home because interest rates are so low. Remember, a 1% increase in interest rates would raise your monthly payment by 10%, so you don’t want to wait for that to happen. As rates increase, affordability falls as more money goes to the interest portion of the payment.

Am I speaking out of both sides of my mouth? Here is my defense…

Example: You are buying a $300,000 home with a 20% down payment, meaning you will be financing $240,000.

If today’s 30-year fixed interest rate is 3.875%, the monthly principal and interest payment would be $1,128.57 per month.

If the rate moves 1% higher to 4.875%, the monthly P&I payment would be $1,270.10 (an additional $141.53 or 12.5% more).

∗∗ More math for the numbers geeks (like me): Two arguments

1)  Life of the loan perspective – The number of payments (360 months) multiplied by each payment equals $406,284 and $457,236.  In this example, the 1% higher interest rate costs the buyer $50,952 more in interest over the life of the loan.

2)  Affordability perspective – $240,000 @ 3.875% = Principal and Interest payments of $1,128.57. To reach the same payment at 4.875% interest would require a lower principal amount of only $213,256 or $26,744 LESS HOME TO REACH THE SAME PAYMENT… Affordability suffers.

For advice on getting your offer accepted in a competitive market like ours, click here to check out one of our previous videos on the topic

If you have any questions about our market or you’re thinking of buying or selling real estate, give me a call or send me an email soon. We’d love to help you!

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What happened in the Dane County real estate market in 2016? What can we expect for the rest of 2017?

In 2016, we set a new record for the all-time number of sales for single-family homes and single-family condos, finishing the year with 8,073 sales. December was also a record month. In fact, sales during that month were 17% higher than December 2015.

We accomplished this even with a restricted amount of inventory. That restricted inventory put pressure on prices, and we saw an increase in the median sales price of about $13,000. As far as the level of inventory for homes and condos, at the end of 2016, we had a supply of 1.78 months. This was 25% less than what it was at the end of 2015.

What does all this mean? It’s generally thought that a balanced market (e.g. favoring neither sellers nor buyers) has about a six-month supply of inventory. We finished the year squarely in a seller’s market, and we’re still in a seller’s market. At the end of January, our inventory level was at 1.5 months, which is even less than what we ended 2016 with. This lack of inventory will probably put further pressure on pricing and cause it to continue to increase.

When rates go up 1%, mortgage payments go up 10%.


However, we also have to remember that interest rates, despite an uptick after the election, are still at historically low levels. Any type of rise in interest rates hurts buyers’ affordability. For every 1% increase, a buyer can afford 10% less of a home. At these current levels, then, it’s still a great time to purchase a home.

In summary, 2016 was a great year, and we expect more of the same in 2017. It should be a great year for sellers, but we also envision a great year for buyers as long as interest rates remain low.

If you have any questions about our market or need any assistance, please feel free to reach out to me. I’d be happy to speak with you.


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