Housing values won’t crash, but sellers may need to change their methods.
How will our changing market affect you? If you don’t know, interest rates are rising, and they’re causing our housing market to shift rapidly. I want to discuss what this means so that you can make informed decisions and avoid costly mistakes.
First, I want to put our current rates into context. When I was new to the real estate industry, I remember how big of a deal it was when rates dropped below 7%. Lenders were telling their clients to refinance immediately because there was no way they would stay that low for long. When you consider this, our current rates don’t seem so high.
However, interest rates still have a big impact on affordability. Would you rather buy a $1 million home with a 1% interest rate or a $100,000 home with a 10% interest rate? The truth is that your monthly payment for each scenario would be the same, so you may as well buy the nicer property.
“You may have to make adjustments in this market, but there are still plenty of opportunities.”
As the terms of the market change, consumer behavior adjusts, meaning that prices will have to respond to rising interest rates. For example, a friend recently listed a client’s home but couldn’t find any interested buyers. It turns out that they had listed the house too high for our new market. When my team took the listing over, we overhauled the marketing and adjusted the price to fit our current situation. After putting the property back on the market, we received eight offers in just 10 days.
This was great; however, these offers came the same weekend as a major rate hike. Four out of our eight buyers called us and said they could no longer afford the home. We still had four great offers, so our client was fine, but this situation will become more common.
If you’re selling in this market, how can you prepare? I recommend you focus on three things: price, showability, and marketing. You may have to make adjustments in this market, but there are still plenty of opportunities to get a great deal.
If you have questions or are thinking about selling your home, please call or email me. I am always willing to help!