The past few years have seen dramatic market shifts with extraordinarily low supplies combined with high demand, which became extreme when the pandemic instantly changed our housing needs by having us working and schooling from home.
Over the past few months, we’ve been experiencing our newest sharp market turn—the jump in interest rates. Rates continue to yo-yo but have nearly doubled— jumping from roughly three percent the beginning of the year to the five-to-six percent range. The historic low rates we’ve enjoyed and have taken for granted may have permanently passed back into history.
Higher rates affect buyers and sellers equally. They cut directly into the prices buyers can afford to pay. Having fewer qualified buyers for a given price cuts demand for that property. Most sellers are also buyers somewhere in the process as they obtain their replacement home. Higher rates affect everyone in the process.