Welcome to South Oak!

South Oak Development consist of 500 Acres with 300 acres being divided into 3-10 acre lots for Custom Homes with the remaining 200 acres reserved for Hiking, Biking and Walking Trails along with a Barn, Pasture, Boat House, Beach, 7.5 Acre Lake for Fishing and Swimming, Meeting Rooms, Kitchenette, Barbecue area and Full Bath.

Fred Smith, owner and operator of The Fred Smith Group RealtySouth agency in Crestline, said the Federal Reserve’s interest rate hike may finally return the local real estate market to a much-needed state of normalcy. Smith said the economic conditions of 2020 through 2022 created unnatural conditions in the market that should stabilize now that mortgage rates have risen.

“People are getting used to the rates. It’s not like they’ve gone up to something that’s unreasonable. They’ve normalized,” Smith said.

“2019 was the last normal market. Then we had 2020, and we worked our way through that market, then we entered a seller’s market in 2021 and 2022 with bidding wars and all that kind of stuff,” Smith said. “Now, I feel it’s going to be a normal 2023.”

With 30-year fixed mortgage rates hovering at 6.9% and housing prices on the rise, what do the current conditions mean for the average homebuyer? Smith and Thompson both recognize that affordability is a factor in many cases but said there are solid reasons to purchase a home now, especially if you’re renting.

“All of the great reasons for buying a house still exist,” Smith said. “We haven’t seen as good of a time to buy for renters, with rent rates going up 20 to 30% in the last two years.”

For homebuyers for whom a one-point or twopoint rise in rates could cause monthly-payment sticker shock, Smith suggested a couple of strategies. First, he said an interest rate buydown is a viable option or an adjustable rate mortgage, especially for new homebuyers likely to move within five years of their purchase.

“In Crestline, the average homebuyer lives there less than seven years,” Smith said. “If they get a seven-year ARM and they’re moving about every five years, why have a 30-year fixed rate when you can take advantage of a lower interest rate?”

Thompson, who said he believes mortgage rates should settle back down to 3 or 4% over the next few years, suggests a two-for-one buydown mortgage. This option allows the homebuyer to pay 2% lower than the actual rate for the first year of the mortgage, then 1% lower for the second year, then the rate increases to the regular rate in the third year.

At current rates, a homebuyer would pay 4.9% in year one, 5.9% in year two, then 6.9% for the remainder of the loan or, Thompson said, refinance prior to year three.

“If the experts are right,” he said, “that person’s never going to make a payment in the sixes because interest rates will have come down close to 5% and we would have refinanced down before then. So, a two-for-one buydown option can help with affordability.”

Smith also offered one more piece of advice, reminding potential homebuyers they are allowed to write their home’s interest off their taxes. “I’m not going to say it doesn’t matter, but the benefit of being able to write off that additional interest is a wash,” Smith said. “It almost doesn’t matter, because that interest deduction can overcome the difference in that increased interest rate.”