Interest rates are up over 5% now, an increase of 2% from just a year ago.
How will higher interest rates affect home sales in Green Valley? Will home prices come down? There are many things to consider.
The Federal Reserve System, “the Fed,” controls interest rates, and each lending company will have slightly different interest rates depending on their company cost. Normally, in a strong market, interest rates will go up; this can help control pricing on housing. Interest rates can be lowered to help spur the housing market. The problem we have now is that the interest rate is being used to fight inflation.
So the simple answer is that buyers financing today have less buying power than they had just a few months ago. This could end up pricing some buyers out of the market.
Supply and demand keep market strong
I believe in the next year our real estate market is set to stay strong for several reasons:
• Lack of inventory
• Surplus of buyers
• Cash – Cash buyers are unaffected by higher rates
I remember my 1st home purchase. The interest rate was over 10% and I felt lucky to get it. Today’s 5% rate still looks like a bargain..