What Would Higher Interest Rates Do In The 2022 Housing Market
Good Monday Morning!
WHAT WOULD 5% PLUS MORTGAGE INTEREST RATES DO TO THE 2022 HOUSING MARKET?
Back when mortgage rates were 12%, people still bought and sold houses, which cost 70% less. If rates were 12% today, no one could buy a house! Certainly, a 5% interest rate will put downward pressure on prices over time, but what will it do to the market in the near term?
The Good — Higher rates likely mean leveling prices in 2022. More owners and investors might sell now that prices are peaking, creating more housing inventory. Buyers who can still afford to be in the market can make offers on houses without quite so many competing offers, and they'll have more choices. Sellers are not likely to lose much (if any) value, though they won’t continue to see sharp rises.
The Bad — Higher rates mean the pool of buyers will shift around. Some sellers could get fewer and lower offers. Buyers will ask sellers to make more repairs. Some sellers will lose gains they made in the past year. Sellers who want to cash out at the peak may be running out of time.
The Ugly — Higher rates mean many buyers will scale back on the home price they could afford when rates were lower. They may need to drop into a lower price point, which could alter their location or home style plans, or they'll need to come up with a higher down payment.
The Next Wave? Real estate markets are like an uneven, undulating wave, going up and down like a mad roller coaster. The last up-swell has been meteoric. But that doesn’t mean the next down-turn will be just as steep. It is more likely to be a slow glide that levels off somewhere between 2016 and 2022 prices in the next 5 to 10 years (barring unforeseen circumstances). All we can ever do is make the best decision in the moment.
Have An Awesome Week!
Stay Healthy! Stay Safe! Remain Positive! Trust in God!
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