Interest rates are rising, so should you be worried about a crash?
“Will housing prices collapse?” I’ve been receiving this question almost daily. Interest rates have increased dramatically recently, and many homeowners are worried. The answer isn’t cut and dry, so here are four key factors that explain what’s happening in our real estate market:
1. Mortgages are getting more expensive. Our buyer pool shrinks as homes become more expensive, and some buyers are no longer qualified to purchase a home at all. With fewer buyers at all price points, we’re unlikely to see the crazy-high appreciation of the last few years continue.
2. Rents are increasing. Many buyers priced out of purchasing a home are turning to rental options. As a result, the rental market has skyrocketed.
3. There is still a national shortage of homes. Supply nationally and locally is still incredibly low. This will keep prices high even as demand falls.
4. No local or national experts predict a market crash. Instead of a crash, our market may face a correction. This means we’ll return to a more balanced market. Homes will likely sell for 90% to 100% of their asking price, which is typical during normal times. The 2008 crash was caused by loose lending practices that just aren’t present in our market. Because of this, a collapse would be very unlikely.
As our market normalizes, it may feel different. However, there will still be plenty of opportunities for buyers and sellers. If you have any questions about today’s topic or anything else, please call or email me. I’d love to speak with you!