Gulf Shores housing has been showing signs of slowing down, and new problems facing homeowners looking to relocate, upsize or downsize, may be the reason why.
The problem is that by doing so, many homeowners would be surrendering a dynamite mortgage interest rate, which means even if the home they want to buy is about the same price or just a little more, they could end up paying much more per month.
Rates Inching Up for Gulf Shores Housing
Interest rates for those looking at Gulf Shores housing have been ticking up slowly since the middle of 2013 with a few stops and declines, but overall rates are higher and slowly rising.
The average rate on a 30-year mortgage fell below 4% toward the end of 2011 and reached a historic low of 3.3% in November 2012.
Rates on a 30-year fixed did not rise above 4% until June 2013, and in the interim homeowners and buyers went on a purchase and refi spree. Today, almost one in three active residential mortgages has a rate below 4%.
With this serving as a disincentive for otherwise qualified, motivated borrowers, it contributes to the spiral or rising affordability gaps (and hence, sluggish sales) since it has a negative impact on the available Gulf Shores housing inventory.
Coupled with the decline in new construction and the shrinking pool of distressed properties, it's a recipe for a really tight market, inventory-wise.
Home sales nationwide picked up momentum entering the summer months, and the latest numbers show that home prices are rising at a faster pace than at the start of 2014.
Constructed to gauge the price movement among normal home sales by excluding distressed properties, the index rose 1% from April to May. On a year-over-year basis, the rate of home-price appreciation across the nation slowed by 1% to 2% when compared to the first quarter.
This combination of rising prices and shrinking inventory is one of the reasons the Gulf Shores housing recovery may be coming to a halt.
For more on Gulf Shores housing trends and news, visit our Gulf Shores Real Estate section of articles under our Gulf Shores Real Estate Categories to the right.