Interest rates will have a huge impact on our housing market.
In case you don’t know, the Federal Reserve raised interest rates for the fourth time this year. This is huge news because for every 1% interest rate increase, home values decrease by 10%. Why is that?
The best way I can explain it is with an example. Let’s say you wanted to buy a $1 million home in 2021 with a 3.5% interest rate. Your monthly mortgage payment would be around $5,000. Now that interest rates are around 7.5%, you could only buy a $700,000 home if you wanted the same monthly mortgage payment. This is causing demand to take a hit, and sellers are reducing their prices as a result.
The good news for sellers is that inventory is still fairly low. Supply is up slightly, but there still aren’t enough homes to meet demand. That being said, it usually takes about 90 days for the market to respond to rate changes, so our market could shift even further.
If you’re planning on moving within the next few years, consider selling sooner rather than later and capitalizing on high prices while they last. Call or email me if you’d like to discuss your situation. My team is always here to help!