{"id":5865,"date":"2022-07-18T10:38:35","date_gmt":"2022-07-18T14:38:35","guid":{"rendered":"https:\/\/talk.talktotucker.com\/?p=5865"},"modified":"2022-08-11T09:42:41","modified_gmt":"2022-08-11T13:42:41","slug":"what-do-rising-interest-rates-mean-for-real-estate-buyers-and-sellers","status":"publish","type":"post","link":"https:\/\/talk.talktotucker.com\/tucker-mortgage\/what-do-rising-interest-rates-mean-for-real-estate-buyers-and-sellers\/","title":{"rendered":"What Do Rising Interest Rates Mean for Real Estate Buyers and Sellers?"},"content":{"rendered":"
<\/div>\n

When the pandemic began, interest rates started taking a nosedive, and the effect on the housing market was immediate. Not only was there a rush to refinance existing loans, but a lot of would-be homeowners were rushing to take advantage of the extra buying power that those low interest rates were providing. <\/p>\n\n\n\n

Sellers, for their part, suddenly found themselves in princely positions: Almost any home that hit the market suddenly had multiple offers, often over the asking price. Sellers could pick and choose among potential buyers, looking for offers that bypassed contingency agreements and even the usual home inspections.<\/p>\n\n\n\n

Well, nothing lasts forever, right? Inflation has risen dramatically in the last year alone, and the Federal Reserve has been steadily bumping those interest rates back up \u2013 and there\u2019s every indication that this will continue to happen in the near future.<\/p>\n\n\n\n

How does the change in interest rates affect you if you\u2019re hoping to buy your home? What does it mean if you\u2019re a would-be seller? Here\u2019s what you need to know:<\/p>\n\n\n\n

<\/p>\n\n\n\n

It\u2019s Still a Good Time to Get a Mortgage<\/strong><\/h3>\n\n\n\n

As of early July, 30-year fixed-mortgage interest rates were still hovering below 6%<\/a>, and 15-year fixed rates were still below 5%. While that\u2019s not the record 2.65%<\/a> that was seen back in January 2021, the current interest rates are still historically low.<\/p>\n\n\n\n

If you\u2019re old enough, you may easily remember when mortgage interest rates were 12% or even higher, and there\u2019s a long way to go between where we are today and that kind of interest rate coming back. <\/p>\n\n\n\n

If you\u2019re a would-be buyer, the increase in interest rate may be a little inconvenient \u2013 essentially forcing you to either adjust your expectations about how much house you can afford or adjust your expectations about what you\u2019ll have to pay up-front \u2013 but it shouldn\u2019t stop you from making a deal.<\/p>\n\n\n\n

Generally speaking, every 1% increase<\/a> in an interest rate reduces your buying power by about 10%. If you qualified for a mortgage in the $500,000 range when interest rates were about 3%, for example, you may only be able to qualify for a $400,000 mortgage once interest rates hit 5%. That means you\u2019ll either have to look for a less-expensive home or come up with a much larger down payment.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Sellers Will Also Have to Adjust to a Changing Market<\/strong><\/h3>\n\n\n\n

Sellers in today\u2019s market may feel like they\u2019re getting whiplash from the rapid change in their position \u2013 and that\u2019s not far from the truth. <\/p>\n\n\n\n

It\u2019s still not a bad time to sell your home (especially if you were already planning on moving) because the market is still slightly favoring sellers. That being said, the rising interest rates do change the real estate game quite a bit. With interest rates rising, buyers need to:<\/p>\n\n\n\n

1. Recognize that some of their potential buyers just got knocked out of the market. <\/strong><\/p>\n\n\n\n

High-end homes, in particular, may have a harder time selling quickly as buyers adjust their wallets and start looking \u201cdown market\u201d for less-expensive homes. <\/p>\n\n\n\n

If you\u2019re a seller, you may have to recognize that you can\u2019t expect the offers from buyers to start flooding in the moment your home hits the market \u2013 even if that\u2019s what happened for your neighbors just months ago. If you want the most value out of your home, you need to be patient for the right sale.<\/p>\n\n\n\n

2. Understand that they may not receive the same kinds of bids they would have before.<\/strong><\/p>\n\n\n\n

Buyers are going to be more careful about their money now, so expect those wildly-above-listing-price offers to dampen (or stop). Buyers won\u2019t have the financial ability to make up the difference if there\u2019s an appraisal shortfall, either, so you can expect most or all of the offers you receive to have contingency clauses attached that are tied to appraisals.<\/p>\n\n\n\n

This also means that it\u2019s going to be critical to price a house appropriately. Right now, the fluctuations in the market may make it harder than ever to use \u201ccomps\u201d (comparisons with recent sales) to estimate a property\u2019s actual value. Experienced guidance is going to be key so that you don\u2019t overprice your home.<\/p>\n\n\n\n

3. Realize the value of minor home repairs, upgrades and staging.<\/strong><\/p>\n\n\n\n

A few months ago, buyers were snapping up properties without even looking at them. In some areas, it didn\u2019t matter how dilapidated or outdated a home looked because someone would buy it right away.<\/p>\n\n\n\n

That has changed. It\u2019s time for sellers to put more attention again into home maintenance, minor repairs, small upgrades, aesthetics and staging techniques<\/a> if they want to attract buyers and get the best value for their homes. <\/p>\n\n\n\n

While there\u2019s no reason to go overboard with total home makeovers, neat, well-maintained properties with a few amenities are going to attract more buyers and sell faster as interest rates rise.<\/p>\n\n\n\n

<\/p>\n\n\n\n

What\u2019s the Low-Down with Interest Rates and Real Estate?<\/strong><\/h3>\n\n\n\n

Basically, it comes down to this: It\u2019s not a bad time to buy or sell. While the rise in mortgage interest rates isn\u2019t negligible, it\u2019s not so dramatic that it should dissuade either buyers or sellers from pursuing their goals. All it\u2019s going to do right now is make everybody more cautious \u2013 and conscious \u2013 of what makes a property worth the price.<\/p>\n","protected":false},"excerpt":{"rendered":"

When the pandemic began, interest rates started taking a nosedive, and the effect on the housing market was …<\/a><\/p>\n","protected":false},"author":20,"featured_media":5866,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[8909],"tags":[1225,405],"yst_prominent_words":[495,5711,3816,4418,4106,140,387,761,488,6509,30,6945,7381,703,5802],"fimg_url":"https:\/\/talk.talktotucker.com\/wp-content\/uploads\/2022\/07\/What-Do-Rising-Interest-Rates-Mean-for-Real-Estate-Buyers-and-Sellers-.png","_links":{"self":[{"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/posts\/5865"}],"collection":[{"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/comments?post=5865"}],"version-history":[{"count":0,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/posts\/5865\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/media\/5866"}],"wp:attachment":[{"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/media?parent=5865"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/categories?post=5865"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/tags?post=5865"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/talk.talktotucker.com\/wp-json\/wp\/v2\/yst_prominent_words?post=5865"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}