The most we’ve heard about interest rates of late is that they are still up. These high rates are impacting several markets, primarily the real estate market. The increased rates will raise the average new mortgage by hundreds of dollars a month, making it unaffordable for many who would like to purchase a new home.
The idea or strategy that’s being used has been proven to work and in many ways, is still working. The economy and prices were rising too fast, making things far too expensive, worse than they are now. Interest rate hikes have slowed things down, but the economy is still moving forward as unemployment rates are still low and businesses are still making money.
Rates May Go Up More
While the increases have slowed down spending, especially in the housing market, spending is still taking place elsewhere. Retail stores, service providers, theme parks, cruises and several other businesses are reporting sellouts and record crowds. Don’t believe it? Turn on a football game this fall and then look at ticket prices.
If spending continues like this the likelihood is that rates will continue to go up. However, the question surrounding everyone is whether or not the housing market can withstand higher rates. While it is not impacting the economy like first expected, it is taking its toll on real estate. Homeowners are becoming frustrated at how long it is taking to get their property sold at a fair value in most areas of the country.
People Are Still Buying
Here’s the reality when it comes to our current real estate market, if you want a fair offer, you need to be patient. Good buyers are still out there and they are looking for the right deal and the right property. There’s more inventory and less competition so they are being patient as well, especially considering they will be paying thousands more a year for the property than you are.
Being patient not only means getting a better deal, but it also gives you the chance to sell under a better situation. Have you heard of an assumable mortgage? This gives some homeowners with mortgages that have a low rate to allow the buyers of the property to take over their mortgage, saving them hundreds of dollars a month.
Increases Are Helping
The reason you have never heard of an assumable mortgage is because it has not been something that is needed, until now. You have to check to see if you have that option and enough left on your loan to make it worth going for. For example, if you owe $200,000 and you want to sell for twice that, the buyer can take over your $200,000 at a much lower rate and owe the second part at the current rate. That would save them thousands a year on interest payments while you would get your full amount.
If you have this option available it gives you a great advantage and allows more qualified buyers to work with you on your property. If that’s the case, the increases in interest rates will actually help some homeowners as they can get more for their property because they can save the seller thousands a year.
Expected Impact On Real Estate
If rates go up, it will have a negative impact on the market the longer they remain high. The impact will come in seeing home prices drop. However, that drop is not to be expected to be more than 25% at the max, still keeping home values much higher than they were a decade ago. How this transition will happen and when is still unknown but if you are thinking about selling, now is the time to do so.
This is when you can offer a better option to buyers who want something now. If you are looking to sell you still have time to get high value for your property, but it will not happen in a week. Buyers are looking for the best possible deal that they can manage long-term. The more appealing you can make your home, the easier it is to get the deal you want.
Determining Your Best Options
Will your house sell? For what and how long will it take? What needs to be done to fix it up and get it ready to sell? You have a lot of questions and the best way to get answers is by working with a local realtor, someone with the experience you need to rely on when making important decisions. The market is strong right now. Where will it be next year? No one can say and there are signs that it will remain strong as well. That’s why you want to focus on local markets and your situation to determine your best options.
