With interest rates rising the last couple weeks - yes that will impact the real estate market. How you ask? interest rates are a large part of determining a monthly payment. Most people when they look a affording a home look at the monthly payment first, then the home price.
Here is how the rise in interest rates impacts monthly payments:
A year ago the 30 year fixed rate was around 3.125% and today around 4.5-5.0 %. That increase in rate, on a $400K mortgage causes the Monthly payment (principle and interest only) to go up 18% per month. That is why increasing interest rates causes the real estate market to slow down.
As less buyers can afford higher prices I expect less bidding wars so the monthly appreciation will slow down. So how long will that take?
Here are the results of a recent Zillow survey:
I am sure this survey was take before the increase in interest rates.
When do I think we will get to a a more "NORMAL INENTORY LEVELS?
Here are what our inventory levels are (per FMLS) in Alpharetta, Cumming, Milton and Suwanee:
A "normal" healthy market is about a 6 months supply of homes on hand. Today, we are below a one month supply in each of these areas.
I expect the rising interest rates to slow our market considerably so if I had to pick one year - I would say 2023.
If you want to discuss your real estate needs call, text or email me at 770 722-7010 or John.Foster@kw.com.
In todays market, remember Experience Matters - if you want to discuss the impact of the inventory levels or higher rates on your plans - I would love to talk to you.