During the pandemic, the housing market boomed in major cities across the country, with homeowners seeing multiple offer situations and receiving offers way over asking. The historically low interest rates we have seen in the last 2 years gave buyers more buying power which in turn was an advantage for sellers.
In the last few months, homeowners have begun to worry as interest rates have significantly increased as a way to combat inflation. With the rise in interest rates, what does this mean for the real estate market? How will this affect you on the sale of your home?
Let's first look at where interest rates currently are and what this means for the housing market for the last half of 2022:
What does a rise in interest rates even mean?
The Federal Reserve Board (The Fed) is responsible for determining the rate at which banks borrow and lend money to one another. Target Interest Rates are often relative to the current economic activity.
This means that when the economy is struggling with inflation, The Fed will raise interest rates as a way to combat inflation by limiting buying power from consumers. This in-turn causes people to spend less leading to a decrease in demand for goods and services.
Where are the interest rates now?
In regard to homeownership, this is something many homeowners are keeping their eye on as interest rates continuously rise in 2022. The Fed released a statement which indicates that rates will continue to rise throughout the year.
According to Freddie Mac, the current rate averages for mortgage types are have been increasing significantly in a short period of time
Below is an example of the average 30 year rate as of June 2022:
What this means for Sellers...
According to the Wall Street Journal, the rise in interest rates is causing a sense of urgency for homeowners to list their home for sale.
As mentioned, the increase in interest rates will force many buyers to reconsider their budget, so sellers may not see multiple offers above asking price similar to what we have seen in the last 2 years.
With buyers essentially ‘losing’ buying power they would have otherwise had with 2% and 3% interest rate averages, selling a house at a higher price becomes more challenging as the pool of buyers who can afford it becomes much smaller.
What if you need to sell ASAP?
While not everyone may need to sell due to an increase in rates, there are many that want to cash out at this time due to the historically high value of homes and the uncertainty in the market. So if your specific circumstances warrant selling, or you are looking to maximize your home’s value, now is still a great time to sell
If you were planning to sell your home, but are alarmed by the rise in interest rates, you can always explore if selling your home as-is would make sense for you to meet your needs.
Why choose Congressional Home Buyers?
Congressional Home Buyers is a local Washington, DC area home buyer unlike many other companies you might find on your web search when you are looking to sell your home. Dedicating to providing best in class service, competitive offers, and unmatched local market expertise, we strive to make our sellers satisfied. From making the process fast and easy to being transparent and offering great perks to sellers – those who are looking to sell their home in the DC area will not find this level of dedication to service elsewhere.
Start today if you are interested and see what we have to offer!