How High-Interest Rates Affect the Sale of Your House

How High-Interest Rates Affect the Sale of Your House

Table of Contents

It seems like you cannot escape inflation right now, whether in your pocketbook or in the news headlines. Even home prices are catching up, especially in larger metropolitan areas. You might think this would be good news if you’re looking to sell your house, but high-interest rates can actually have a chilling effect on the sale of your house.

While a higher price tag might look good on paper, potential buyers are often deterred by the large monthly payments with high-interest rates. In addition, many people who are looking to buy a house are also trying to lock in a low-interest rate for their mortgage. As a result, they might be less likely to take on the additional risk of buying a home with a higher interest rate.

Why Did The Fed Raise Interest Rates?

The Federal Reserve has raised interest rates in 2022, and they most likely have hinted that they will continue to rise throughout 2023. The reason for this is to keep inflation in check as the economy continues to recover from the 2020 COVID-19 pandemic. While this might be good news for savers, it’s not such great news for borrowers.

If you’re considering selling your house, consider doing so sooner rather than later. While you might get less money for your house than you would if interest rates were lower, you’ll likely have an easier time finding a buyer who is willing to pay your asking price.

On the other hand, if you’re not in a rush to sell your house, you might want to wait until interest rates stabilize or even start to decline. This way, you’ll be more likely to find a buyer willing to pay closer to your asking price, and you might even be able to negotiate a higher price.

No matter your plans, it’s important to stay up-to-date on interest rates and how they might impact the sale of your house. This way, you can make the best decision for your situation and ensure you get the most money possible for your home.

How High-Interest Rates Affect the Sale of Your House

How Rising Interest Rates Affect Property Values

When the Federal Reserve raises interest rates, it doesn’t just affect your mortgage payments. It can also have a significant impact on property values. In general, higher interest rates make it more expensive to borrow money. As a result, people are often less willing to buy houses when interest rates are high. This decrease in demand can lead to a decrease in prices, which is bad news if you’re trying to sell your house. Of course, the relationship between interest rates and property values is complicated. Many factors can impact prices, including the economy’s strength and credit availability. As a result, it’s difficult to predict exactly how rising interest rates will affect the sale of your house.

Will Rising Interest Rates Cool the Red-Hot Real Estate Market?

There is no doubt that record-low mortgage rates helped fuel the housing boom of 2020 and 2021. Some think it was the single most crucial factor in pushing the residential real estate market into overdrive.

The coronavirus pandemic and resulting lockdown also played a role as more people fled cities for the suburbs and looked for larger homes to accommodate work-from-home arrangements. All of this demand helped push home prices to new all-time highs in many markets across the country. Now that mortgage rates are on the rise again, some worry that it could put a damper on the market’s momentum.

How much of an impact will rising rates have?

It depends on whom you ask. Some say it will be significant, while others believe it will only slow the market down slightly. The truth is, no one really knows for sure. What we do know is that higher mortgage rates will make homes less affordable, which could lead to fewer buyers in the market and put downward pressure on prices. Rising interest rates could also cause some would-be sellers to reconsider their plans and stay put for a while longer, further reducing the number of homes for sale. This rate hike could lead to even more bidding wars and put even more upward pressure on prices in already hot markets. In other words, the effects of rising interest rates on the housing market are complicated to predict.

What Does This Mean for Sellers?

While you might get less money for your house than you would if interest rates were lower, you’ll likely have an easier time finding a buyer who is willing to pay your asking price. On the other hand, if you’re not in a rush to sell your house, you might want to wait until interest rates stabilize or even start to decline. This way, you’ll be more likely to find a buyer willing to pay closer to your asking price, and you might even be able to negotiate a higher price.

If you still need to figure out what to do in times like this, contact an experienced realtor today to help you get the most money for your house. Joshua Vigo-Fas has experience getting the best deals for his clients, regardless of market conditions. Give Josh V Realty a call today at (213)465-0936, or visit our website at www.joshvrealty.com. You’ll be glad you did.