Regardless of your opinions about the campaign trail, election, or its results, I’m betting most of you have own a home, have owned a home in the past, or plan to in the future. And what I want to talk about is interest rates, forecasts, and real estate buying power, and how it affects both sellers and buyer alike.

 

Higher rates lowers the price buyers can pay and sellers can sell for

I’ll cut to the chase. For every 0.5% (one-half percent) rise in mortgage interest rates, buyers purchasing power decreases 4-5%, and if it spikes by a full 1% it results in a 9-11% decrease in buyers purchasing power.

 

Now before you freak out, know that in the grand scheme of things 0.5% is a blip on the radar, granted a costly one if you want to buy a nice home or sell your home to the widest pool of buyers. But when you couple this rise with the fact that the only reason the Federal Reserve postponed rate rises to far was because of BREXIT and that the Fed shows the economy is improving, then it’s safe to say rates will rise. And that not only means you should buy and/or sell sooner rather than later, but also that because of this “uncertainty” in the general markets, it’s more important than ever to have a tech-savvy, versatile, and comprehensive real estate team at your disposal. And that’s us, The Sterling Real Estate Team.

Historically Rates Are Still Incredibly Low

Rates today are still half of what they were after 2008’s election, and 10% lower than 1984’s election. But at the end of the day, even Zillow thought this interest rate spike was noteworthy enough for an official press release. Take what you will out of that. With the possibility of Fannie Mae and Freddie Mac being privatized, there’s a looming threat of the 30-year mortgage option disappearing that would irreparably hurt anyone wanting to buy a home.

If you're interested in seeing what our team can do for you, our analysis of the real estate market in your area, or have any other questions, call us at 404-808-3003 or email us at contact@teamsterling.com