Housing market like a Hot Pocket: Parts of Victoria are hot, others not | For Subscribers Only
The housing market is like a hot pocket fresh out of an old microwave, burning-lava hot in some places and frozen solid in others.
Victoria seems to be just outside the flaming center — not hot, but not frozen either — according to broker Veronica McCants, co-owner of ReMax Land and Homes, 5215 N. Navarro St.
McCants shared the Hot Pocket analogy, which she picked up from the Sacramento Appraisal Blog, to describe the housing market in Victoria as interest rates on home loans rose slightly in the past two months.
According to Freddie Mac, which purchases mortgages from banks and brokers, the interest rate on a 30-year fixed-rate mortgage rose from 4.98% in April to 5.23% in May 2022. McCants said June’s rate remained to be determined, but will probably also rise slightly.
The average cost of real estate sold in Victoria also rose, from $274,882 in April to $283,874 in May, according to data from the Victoria Area Association of Realtors.
“The higher interest rate has affected the Victoria market slightly,” McCants said. “We’ve had people that had the intention to buy a $300,000 house and now they are having to lower their expectations a bit.”
ReMax Realtor Ernest Guajardo Jr. said an increase in an interest rate of just 1 percentage point will raise a monthly mortgage payment by about $200, and that rate stays the same for the life of the mortgage, usually 30 years.
“People right now are on the sidelines,” McCants said. “They may want to buy a house, but they’re afraid because the interest rates have gone up and house prices have also gone up. Then, you have the higher costs of food and gas and other things people have to figure into their family budget.”
Guajardo and McCants said 383 homes were on the market in Victoria as of Wednesday.
“Normally, we have about 500 homes for sale,” Guajardo said. “People are more reluctant to leave their homes now. They’re sitting it out a little bit.”
Guajardo pointed out both sellers and buyers are reluctant.
“We’re not as busy as we would normally be,” Guajardo said. “Because of the current state of the economy, people are hesitant. They don’t know what the future holds.”
We are not in a lending situation that will lead to another housing bubble like 2007-08 that caused the damaging recession, McCants pointed out.
“That happened because of a high unemployment rate at that time and a lot of foreclosures,” McCants said. “People bought houses with 100% financing. They put no money down.”
Guajardo said current interest rates only sound frightening when compared with very recent lower rates.
“When I started in this business 40 years ago, the interest rate was 18%,” Guajardo said.
In May 1982, the average interest rate on a 30-year fixed-rate mortgage was 16.68% however, the average home back then cost about $70,000, far below the current costs, according to Go Banking Rates.
Tamara covers the public safety beat for the Advocate. You can be reached at 361-580-6597 or [email protected].