Interest rates are rapidly climbing. In fact, they have risen over a half of a percent in the last three months. But, how do rising interest rates impact buyers and sellers?
Interest rates, although they are climbing, are still at a historic low, hovering at 4.5%. This is lower than the 8.5% historic average and significantly lower than the rates from the 80s which sat at 16% to 18%.
How does this impact you?
If you were shopping for a house for $350,000 and the interest rate increases by 1%, now you will be shopping for homes that are $311,100.
If you are a buyer, your buying power decreases. When the interest rates go up by 1%, the cost of owning a house goes up by 10%. In other words, if you were shopping for a house for $350,000 and the interest rate increases by 1%, now you will be shopping for homes that are $311,100.
Meanwhile, if you are a seller, for every 1% increase in interest rates you lose 18% of the buyers that are in your pool.
So, the bottom line is this: Interest rates are climbing, and they are going to have an impact on the real estate market. If you would like to buy or sell, now is the time to capture the market while it is still hot and before interest rates rise above 5%.
If you need help with buying or selling, please feel free to contact me. I would be happy to assist you in any way that I can.