Interest rates are rising. What will happen to the market now?
Interest rates are a huge concern for buyers and sellers right now. Today I’ll share a few details about rising interest rates and how they affect the market.
The recent interest rate increase by the Federal Reserve has been the largest we’ve ever seen. Rates went from 3.5% to around 6%, depending on your credit score and other factors. This is almost equivalent to a 24% price increase in a 90-day period. Last year, we had a 16% increase in prices. From a buyer’s perspective, prices have effectively increased more in a few months than they did all last year. However, sellers are not seeing this because the actual home prices have flattened so much due to rising interest rates.
“Buyers should be pre-approved before looking for homes.”
What does this all mean? For buyers, they’ll qualify for a smaller home, and their monthly payments will also slightly increase. Sellers will have fewer offers, or they may even get none if the house isn’t priced correctly. Before seeing the property, sellers should make sure that the buyer is pre-approved. As interest rates continue to rise, they may have to reduce prices since most buyers are payment-driven.
If you have questions about this, or if now is the right time for you to buy or sell a home, feel free to give us a call or shoot us an email. We look forward to hearing from you!
