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BERNARDBODO / ADOBESTOCK
Interest rates are always changing, and it can be hard to predict when they’ll go up or down. Here are some ways higher interest rates have affected the housing market.
A Balanced Market
Home prices are still up compared to last year, but most experts agree that home prices have peaked and are starting to adjust in many markets. Ultra-low mortgage rates brought a large number of buyers into the market, which drove up property prices as buyers competed for available homes. The increasing mortgage interest rate has priced many buyers out of the market. With fewer buyers shopping for homes and inventory increasing in some markets, sellers are beginning to adjust their asking prices to help prospective buyers afford the monthly interest and principal.
Less Competition
Buyers bemoan the higher monthly payments and reduced budget that come with a high-interest rate, but the flip side of this is that it gives them more leverage in negotiations. The bottom line is that rising interest rates price more buyers out of the market and motivate investors to stay on the sidelines for now. This means that instead of going up against 10 offers, buyers have a chance of being first in line.
More Negotiating Power
Buyers who can afford to stay in the game have more ground to stand on. Gone are the days of waiving contingencies and inspections. When sellers are more motivated, buyers are able to make reasonable or reduced offers—and even negotiate credits or repairs. This is a huge change from the market frenzy that occurs with ultra-low interest rates. For the right buyer, now may be the perfect time to get into the market before interest rates rise further.
Buyers, interest rates are much higher than the rock-bottom rates of the last few years, but they are still historically low. Now is the time to secure a skilled real estate agent to start shopping. Sellers, you can still get a good price for your home, but be prepared to make concessions, such as rate buy downs or even helping with closing costs.
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