So……here’s the deal. Experts have been debating about what’s going to happen to the housing market when mortgage rates hit 5% and higher, and now we’re going to find out!
Allow me to put the current rates into perspective a little with some numbers: As of today, Freddie Mac listed the most recent 30-year rates at 5.78%, which is 2.67 percentage points higher than they were at the end of 2021. If a hypothetical buyer with a 20% down payment was preapproved for a $750,000 home in December, they’re now only approved for a home worth $547,000. Yes, $203,000 less, which means they’ve been completely priced out of the market they were originally searching in.
So. Many. Buyers. have been eliminated from the competition by these rising rates, which means that at least some of the demand has been reduced. With that said, the sale price increases you’ll see for May are reflective of March’s accepted offers, which came with rates in the mid 4%’s. There are also still a lot of cash or low-down-payment buyers running around who are willing to offer over-asking, but those buyers alone won’t be able to sustain the double-digit price increases for long.
Curious how your town did? Check out the stats HERE.
