How Will Higher Interest Rates Affect The Real Estate Market?

Well 2022 is here and while 2021 saw record low rates, 2022 will see those rates start to go up. How will those rise in rates affect 2022?

So we have known for months now that a rate hike has been long overdue and the Federal Reserve made it very known that rate hikes were in the future. Well 2022 is the future, so now what?

My straight forward response is it will slow things down, but the market will continue to be strong. Maybe not record setting numbers but still strong. Why? The economy overall continues to be strong in the US and especially here in the North Texas area. With that comes very strong buyer demand, and the inventory shortage continues. So with those two items at hand I see the market being able to absorb the hikes to come out strong.

But please know, prices will not rise as quickly, less buyer demand and maybe inventory that is on the market longer than before. Please know these past few years have been beyond strong, and that trend just can not continue. However just know just because the market slows just a bit doesn't mean it is slow by any means, it just means it may still be strong but not record breaking. We will still be VERY far from a normal market.

With the heart of a teacher I look to educate my clients about the process of buying, selling or renting real estate. I strongly feel an informed and educated consumer will be more confident & make better decisions. Have questions about this or other topics, do not hesitate to contact me.

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Luis Cuevas, Broker/Realtor®

Serve Realty

(214) 783-0535

Luis@ServeRealtyTx.com

Check out my website for more helpful tips: http://ServeRealtyTx.com

Subscribe to my YouTube Channel: http://Youtube.com/MakeNorthTexasHome

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Interest Rates In Perspective

Interest Rates In Perspective

Mortgage interest rates continue to go up and for many buyers this worries them but I wanted to take a moment to put mortgage interest rates in perspective.  Rates are important and yes an increase in a rate can make it more expensive to borrow money.  However we are still seeing low rates despite the increases when compared to the last couple of decades.

Currently as of June 2018 a mortgage interest rates are hovering around the high 4.75% range and up.  Remember rates change several times even in one day and the terms affect your rate.  Someone putting more money down and financing for 10 years could have a lower rate than someone putting 3% down over 30 years.  Terms matter but for the sake of keeping all things equal we will focus on minimum down payments and a 30 year mortgage.

If we look back just five to eight years we will see rates have been in a fantasy land.  The rates hit all time lows in the three percent range which is behind ridiculous when you take a step back.  With that kind of rate you are not far from borrowing money for free.

September 11, 2001 changed our nation and it had a negative affect on our economy.  As  a result rates were lowered to get our economy up and going again which lasted for twelve plus years.  The second major issue was the recession in the 2008 time period and several years afterward which also kept the rates low.  Since then the economy has gained strength and as a result you are starting to see those rates increase.

But let’s look at the early 2000’s, you were seeing rates in the six and seven percent range which was normal if not very good.  After September 11 is when you first start this plunge in interest rates.  The nineties were strong economic times for our country and our rates reflected that.  It wasn’t uncommon to see seven percent and up be a standard rate.  

How about the eighties?  This decade had its fair share of financial hits which are reflected by the fluctuation of rates at that time.  It is in the eighties that you saw double digit interest rates as high as eighteen percent!  How would that fly in today’s market, trying to buy a home with that type of interest rate.

I like to look back at history and remind ourselves of how lucky we really are to have such low rates.  Remember we didn’t even discuss the down payment requirements, those too are really low.  In the past a minimum of 20% or more of a down payment was not out of the ordinary.  So as you see the rates increase be sure to keep it all in perspective, it has been much worse and we are not even close to those times.  We are still living in a mortgage interest rate fantasyland in my opinion.

With a heart of a teacher I look to educate my clients about the process of buying, selling or renting real estate.  I strongly feel an informed and educated consumer will make better decisions and be less likely to be taken advantage of.

Have questions about this or other topics, don not hesitate to contact me.

Don’t forget to “LIKE” this video and be sure to Subscribe to my YouTube Channel as well.

Luis Cuevas, Realtor®

RE/MAX Cross Country

1990 Justin Road

Highland Village, Texas 75077

(214) 783-0535

Luis@MakeNorthTexasHome.com

Check out my website for more helpful tips:

http://MakeNorthTexasHome.com

Subscribe to my YouTube Channel:

http://Youtube.com/MakeNorthTexasHome

Follow me on Facebook:

http://Facebook.com/MakeNorthTexasHome

How Rising Interest Rates Affect You | Luis Cuevas Realtor® | RE/MAX Cross Country

Rising interest rates are becoming a reality but how do the rise in interest rates affect you if you are buying a home?  The reality is the economy is strong, unemployment is low and consumer confidence in their jobs is high, which equals a strong buyer demand for housing and mortgages.  Add the fact interest rates have been at historical lows for several years now and you can only expect to see rates begin to rise.

So what does that actually mean to you when you are thinking about purchasing a home?  Lets start with the basics, what are interest rates?  Interest rates are essentially the cost to borrow money.  The higher the rate the more expensive it is to borrow money.  When things are more expensive, in this case money to buy a home, then you can afford less.

Higher interest rates equal higher cost to borrow funds which ends up affecting the amount you can borrow.  For those consumers who may be maxed out at borrowing a certain amount, in this example lets say $300,000.  If the rates go up the amount the person could borrow would go down, lets say $290,000.

The higher interest rates caused the expense of borrowing to be lower which means a higher payment, however in order to stay under a certain payment the amount borrowed had to be adjusted downward.  This lower amount borrowed equals a lower sales price a consumer can qualify for.

Expect interest rates to continue to rise as the economy continues to be strong.  I just don’t see rates going down at all.  So if you have been thinking about buying a home just realize now may be the time to buy while rates continue to be low.

With the heart of a teacher I strive to educate my clients so they can be better informed.  I strongly believe an informed consumer makes better decisions and are less likely to be taken advantage of.

Have questions about this or other topics, don not hesitate to contact me.

Don’t forget to “LIKE” this video and be sure to Subscribe to my YouTube Channel as well.

Luis Cuevas, Realtor®

RE/MAX Cross Country

1990 Justin Road

Highland Village, Texas 75077

(214) 783-0535

Luis@MakeNorthTexasHome.com

Check out my website for more helpful tips:

http://MakeNorthTexasHome.com

Subscribe to my YouTube Channel:

http://Youtube.com/MakeNorthTexasHome

Follow me on Facebook:

http://Facebook.com/MakeNorthTexasHome