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by bluejay2
1150 days ago
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Yes, high mortgage rates should temper demand somewhat, all else equal. But the effect may not be as large as you might expect given the increasing prevalence of all-cash buyers. Unfortunately, high mortgage rates also work to reduce supply. A lot of homeowners who locked in 3-ish% mortgage rates in the last couple years don't want to move unless absolutely necessary, because that would mean refinancing at a higher rate. Looking for a home is stressful, but keep saving and be patient. I wish you good luck. |
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That factoid gets parroted in every article about the housing market, but the fact is that for the vast majority of homeowners, when they sell their house, they are also simultaneously buying a house. So if more of them choose to sit on the sidelines, that reduces both the supply and the demand equally.
Interest rates might have an impact on investor-types, in a way that could move the market (for example if more investors postpone selling in favor of renting to keep their low rates). But investors tend to have shorter duration and/or ARM mortgages (because the 30 year is for the most part only available for primary homes), which means that the higher rates will catch up to them eventually. The CRE market is a good example of how that is playing out.