Interest Rates and Real Estate

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Real Estate is LOCAL.  That’s the first and foremost thing to remember.  Your particular market may be different from all others…like if you live in proximity to a waste treatment plant.  But in general, as we see interest rates rising, here’s what I see happening.  SEE as in visualizing the future.

First time buyers, or those who can’t put away tens of thousands of dollars in savings, are in even worse position to try to get in the market.  We’ve already seen that demographic pushed out by exorbitant due diligence fees and high ‘above list price’ offers.  Some of them could still compete with help from family, but if you pile on high food and gas prices, which push everything else higher on top of rising interest rates, money for a house payment has disappeared like smoke. 

Having said that, my theory is that the government will push rates up until they stall the market entirely, then they will back down.  I’ve seen this SO many times.  It’s all relative, however.  Pushing up to 10 percent and backing down to 9 isn’t going to help my young buyers at ALL.  And yes, I said government, because lenders and government are one. We all know, or should know, that.

So what I see is that people with high paying jobs and wealthy families will be the ones to backfill the entry level buyers.  In other ones, the ‘privileged’ ones will be the buyers, unless some kind of program is introduced.  I’m not a fan of giving everything to people who are not willing to work.  I’m talking about the ones who work their fingers to the bone every day and still cannot afford to buy a home. That’s the group who need a hand.  It happens to be my favorite group to serve in real estate, because helping someone get their first house is an honor.

In my market as of today, I don’t see the market suffering much.  Except that I am very upset about entry level buyers being shut out, I see my real estate business carrying for now.  Until the economy crashes.  But the buying demographic is changing by the minute.

Can You Carry Your Coffee Without Spilling It?

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There’s a new product out there that looks like a little swing. A coffee cup sized seat is at the bottom.  You can put your coffee on that and carry it like a pendulum, thereby keeping you from spilling your coffee while you walk.  Isn’t that special.

If I ever see you using one, I’m going to have a deep discussion with you about birth control.  If you can’t walk and carry a cup without spilling it, you don’t need to reproduce yourself.  Or you’re two.


What does the current state of being have to do with real estate?  Well, everything.  I try to pay attention to world events without having a stroke, but I find that I have to mitigate the time I spend investigating, even listening, in order to not blow a gasket.  The reason is this: I don’t know what to believe anymore.  Therefore I don’t believe any of it.  That’s the danger of misinformation, which seems to have become ‘mainstream’.  Scientists, and I mean the real ones, not politicians, often have been bought and paid for so now, the place once set aside for the pursuit of truth, is now in pursuit of power and money.  This stuff is already effecting our finances.  Ukraine?  The stock market is quivering, quaking in their boots, stock prices are waggling all over, investors are perched to run and hide.  Yeah, this stuff effects real estate.

Interest rates are rising, and inflation is squeezing the life out of budgets.  This means people who could afford a house last year maybe cannot now, because a good portion of their once planned house payment is now being spent on gas and food.  And it’s going to get worse.  Politically, as well as in most things, you cannot do an instant adjustment and not expect things to go flying off of shelves and back seats and breaking. A long snow turn keeps things in place while accomplishing the desired changes, but the wheel has been jerked into a 45 degree turn, and things are breaking and flying off of shelves.  Like gas prices, like food prices, like peaceful existence.  However, we are resilient, and we have survived many such turns.  So there is hope.

People are still buying and selling homes; it’s just that my first time buyers have been shut out of the market for now, unless they have substantial funds set aside, or they have family who can gift substantial amounts of money to them.  I get a lot of phone calls from people, even ones who have bought and sold many times, about what to do in this market.  And I tell them EXACTLY what to expect.  And I tell them there IS a way to win the day.  But it takes having cash to put right on the table, right out of the gate.

So save.  If you want to buy a house, save your money so that you can afford the down payment, the up front costs like due diligence fee, earnest money, inspections, closing attorney fees.  Even if you qualify for 100% financing, you still have up front costs and you need to be prepared for that!  Even with 100% financing, you’re going to need several thousand dollars to pay your attorney and to do inspections.  And even with 100% financing, your offer may be set aside in favor of someone who can put 20% down, or pay cash.  Your best bet is to save.

These days, the market is all about COMPETITION.  If you are a buyer, you’re in a financial race.  If you cannot compete right now, save your money until you can. One of my clients moved in with her mom and dad so she could put rental funds into savings.  It worked.  She now lives in a brand new home that is beautiful.

Listen, I know everyone goes to google to get their info, but you have to remember that people enter false information there as well, or pay to have their ads spiffed up and placed in first position.  Doesn’t mean they know squat.  And just because you find a number doesn’t mean you know anything about the system it applies to.  Doing the ‘most’ of something (even if the number is true) doesn’t mean it represents the ‘best’.  You need to get face to face with people and talk to them.  I can write anything I want to write if I know you’re going to read it to make your decision. But unless you can look me in the eye and read my body language, you don’t know what the truth is.  And that applies to real estate, to finance, to healthcare, to politics, to babysitters, to pet sitters, to mail carriers, to handymen.  If you want a real good skill, try watching some body language videos on YouTube.

If you want to know about science, you’d better get if from someone who isn’t paid to tell you a story.  If you want to know finance, you’d better be able to do the math yourself.  If you want to buy a car, you’d better get it checked out by a mechanic you know and trust, and if you want to know about real estate, you’d better talk to an agent directly to find out if those big numbers are 1) true; and 2) didn’t come from underpricing homes to get quick sales.  There’s a strategy to real estate buying and selling and my strategy focuses on YOU, not me.  And like I’ve said before: If the agent you talk to doesn’t talk about strategy, end the call. And I know you’re CALLING because I just told you how important that is.

Misinformation is everywhere.  Question everything. Okay, go ahead and google, but then, TALK to someone and in fact, talk to SEVERAL someones.  Find out the truth, and make sure YOU are at the dead center of the strategy.

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