Rising rates are causing our market to shift, but a crash isn’t coming.
If you’ve been paying attention to the news, you’re probably aware that our market is shifting. Why is this happening, and are we heading for a crash? Fortunately, you don’t need to worry about a market crash. However, our market may slow down due to a few factors that we want to discuss today.
The main culprit behind our shifting market is rising interest rates. As of the writing of this blog post, rates are at about 5.5%, which is 1.5% higher than they were just a few months ago. This represents a significant change in affordability for buyers, and we haven’t even discussed inflation and supply chain issues.
“Even a small increase in interest rates has a big impact on your monthly payment.”
Despite our rising rates, demand remains strong. At the median and high price ranges, there are still plenty of buyers submitting strong offers. However, entry-level buyers are feeling the hit in affordability.
When we talk to our trusted lenders, they say that buyers fall into two camps right now. One group wants to buy a new home, and if rising rates mean they have to lower their budget, so be it. Another group saw their purchasing power decrease and decided to leave the market for now. Even a small increase in interest rates has a big impact on your monthly payment, so the sharp hike we’ve seen recently has definitely affected some buyers.
If this sounds like nothing but bad news, don’t worry. We’re still seeing a lot of showing activity, and many homes continue to receive multiple offers. The market may shift, but it will remain strong.
If you have questions about today’s topic or anything else, please call us at (952) 212-3597 or email chad@chadandsara.com. We look forward to hearing from you!
