The Impact Rising Rates Have On Real Estate
So how do rising interest rates impact the real estate market in Roseburg OR? One question I get frequently these days, with interest rates continuing to rise, as you can imagine. The short answer is it affects affordability, which is reflected in the average monthly payment buyers are going to make on their mortgage.
Even so, it hasn’t really impacted the demand for housing “yet.” Demand is still incredibly strong and listing inventory is still incredibly low. You know that if you’re out shopping for a home.
A Wrong Look At Mortgage Rates
Yes, interest rates have an impact on the real estate market but there are a couple of reasons for this strong market. One is a wrong understanding of rate history and the second is the impact millennial homebuyers have on the real estate market.
First, when we look at interest rates and compare them only to what we had last month but failed to consider what they were over the past several decades we make a mistake. We still have incredibly low interest rates.
For instance, in the 2000s the interest rate was on average 6.29%, and in the 90s the average rate on a 30-year fixed was 8.12%. Today we’re still averaging less than under 5% on a 30-year mortgage, at least at the date of this recording.
Second, you need to understand the impact the millennial generation is having on the real estate market. This group of young people is quickly becoming the most active buyers in this market. They’re ready to get out of renting and become homeowners. Why do you think that is?
I think they have felt the average rent increase of 15.9% last year (nationwide). They understand that by purchasing a home, these young buyers are locking in a fixed payment that won’t rise… while gaining equity in their own home. It just makes sense.
Keep in mind, that we are being told rates are going to continue rising – most likely all the way through 2023, so if you’re in the market, it’s my opinion that you should lock in your rate as soon as you can. I have several lenders who would be happy to assist you in getting pre-qualified. It’s free and can be done over the phone. It only takes about 15 minutes – just send me a quick text or direct message and I’ll get that information to you.
So do rising interest rates have an impact on the real estate market? Absolutely but as of right now, the low supply and high demand are keeping this moving with no signs (yet) of slowing. We’ll have to watch rates, though, as higher rates can be a determining factor of market strength.