As if you needed another reason to get off your tush and buy a home in San Francisco… here’s a brief history of the 30 year fixed rate mortgage or home loan.

Average and approximate interest rates on the 30-year fixed rate home loan*:

  • 1981 = 18.45% (Holy crap.)

  • 1991 = 9%

  • 2001 = 7%

  • October 2010 = 3.875% (with 1 point) or 4.25% without

  • October 2011 = ?

Will interest rates be lower or higher next October? Check back next year and find out, but here’s a sure bet: interest rates are amazing NOW and prices are down for San Francisco real estate (a rarity). We’ve suffered through a deep, dark, and lingering recession. It’s time to make lemonade.

Who should make a move now? San Francisco first time buyers and so-called “move up” or “trade-up” buyers. Move-up buyers are folks who have grown out of (or just sick of) their starter home, loft, condo, or TIC. We won’t see prices like this again. (OK, the End of Days is hard to predict but I’m pretty certain.)

Now is the time to suck it up and sell your current home at the reduced market value and buy the home you really want at a serious discount. Looking back in 5 years, as you relax on your sunny deck in Noe Valley, in a home with enough room for you and your family, increasing your equity every year by paying 3.875% interest on a 30 year fixed rate fully amortized home loan, you’ll be VERY happy you took the leap of faith and sold your starter home.

(Even my own accountant is encouraging me to do this! 😉 )

Check out an example of why it makes sense to trade up in a down real estate market.

* Thanks again to the fabulously competent, professional and friendly Guarantee Mortgage Zephyr Real Estate team of San Francisco home loan consultants and in particular, Pete Elting for providing this valuable information for first time and move up home buyers in the San Francisco Bay Area!

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