RATES ARE RISING...NOW WHAT ???




Well these past couple of years have been tumultuous to say the least. The pandemic, as well as the changing of the guard at the White House, have impacted consumers’ confidence and sense of stability. That’s never a good thing in the market, and it hasn’t been in this real estate market for sure.


Although interest rates have risen from the low 3’s to the mid 5’s in just the past three or four months, that’s only a part of the story. In an environment of consumer confidence and an otherwise robust or at least stable economy, the impact on the housing market would not have been so catastrophic. But when consumers feel the ladder slipping out from under them as they draw money out of their 401k accounts just to buy gas and put food on the table, that’s a much different story.


What will the future bring ? No one has a crystal ball, but there’s no reason to believe that the current leadership will make a hard turn to right the ship, so the balance of 2022 is more likely to be more of the same. Stay tuned……


So what should a potential real estate buyer or seller do now ? If a buyer can qualify to buy a house they like as their primary residence, even with the higher interest rates, it probably makes sense to do so. Compared to the high cost of renting in this market, there’s usually a financial advantage to owning. It’s also likely that interest rates could float downward again in the next year or two ( as cycles have gone for the past several decades ), so a refinance may be the right choice. In the meantime, they’ve built some equity and enjoyed the “pride of ownership”.


For investors, it’s always about the numbers, so if the numbers work ( ROI, Cap Rate, etc ), then you’ve got a workable deal. Rates go up, rents go up, it mostly washes out.


For sellers, demand is still pretty good so those offers will still come in, just not 20% over asking price as had been the norm in the past six to eight months. And isn’t that what you would have expected in a normal market anyway ?


So rely on your professional Realtor and Mortgage Loan Officer to help guide you along the way and be your long term resource as the rates and market forces change over the next several years.


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