There are some who are calling for a decrease in home prices should mortgage interest rates begin to rise rapidly. Intuitively, this makes sense as the cost of a home is determined by the price of the home, plus the cost of financing that home. If mortgage interest rates increase, fewer people will be able to buy, and logic says prices will fall if demand decreases.
However, history shows us that this has not been the case the last four times mortgage interest rates dramatically increased.
Here is a graph showing what actually happened:
Last week, in an article titled “Higher Rates Don’t Mean Lower House Prices After All,”the Wall Street Journal revealed that a recent study by John Burns Real Estate Consulting Inc. found that:
“[P]rices weren’t especially sensitive to rising rates, particularly in the presence of other positive economic factors, such as strong job growth, rising wages and improving consumer confidence.”
Last week’s jobs report was strong and the Conference Board just reported that the Consumer Confidence Index was back to pre-recession levels.
We will have to wait and see what happens as we move forward, but a decrease in home prices should rates go up is anything but guaranteed.
Attention Agents: For more on how mortgage rates will impact the housing market going into next year and what opportunities will dominate housing in 2017, please join us this afternoon at 2PM ET for our free webinar: The 3 Major Opportunities That Will Dominate Real Estate in 2017. Click here to save your spot!
As we are about to bring in the New Year, families across the country will be deciding if this is the year that they will sell their current house and move into their dream home. Many will decide that it is smarter to wait until the spring “buyer’s market” to list their house. In the past, that might have made sense. However, this winter is not like recent years.
The recent jump in mortgage rates has forced buyers off the fence and into the market, resulting in incredibly strong demand RIGHT NOW!! At the same time, inventory levels of homes for sale have dropped dramatically as compared to this time last year.
Here is a chart showing the decrease in inventory levels by category:
Demand for your home is very strong right now while your competition (other homes for sale) is at a historically low level. If you are thinking of selling in 2017, now may be the time.