Interest Rates and Real Estate

Photo by Kindel Media on

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.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s