Seizing the Opportunity of Higher Interest Rates

The title of this post may sound counterintuitive. How can higher interest rates lead to any opportunity for home buyers? I’ll explain.

First off, I recognize the reality that a hike in interest rates couple with record high home prices doesn’t exactly scream “affordability.” It’s been years since we passed the point that home ownership is out of reach for many Americans.

This is unlikely to change anytime soon. While a rise in interest rates is likely to cool the market, it’s not going to cool it so much that we start to see a rapid reduction in home prices. Low housing inventory will keep things roughly where they are.

Waiting for home prices to decline is unwise.  So, at time like this when many buyers are removing themselves from the market, a savvy buyer sees an opportunity. With fewer buyers in the market, the door is wide open to find the right house and see what a seller might accommodate on price. Right now, no seller should consider any offer “offensive.”

If rates were to suddenly drop back down into the 5’s, buyers would flood the market again, and prices will go up. Instead of waiting and competing, find the house now. And then, plan to re-finance at a time when rates decline.

The potential difference in savings between finding the right house at the right price now vs. waiting and buying at a higher price with a lower rate is very likely offset. Optimistically and theoretically, you’re more likely to get a better deal with high interest rates than you are at lower interest rates in a more competitive market.

Instead of worrying about rates, our lender partners have unique solutions available to buyers that alleviate the effects of rising rates. Strategies involving a seller contributing some closing costs to cover a rate buy-down is an excellent solution that ultimately helps a buyer in the long run while getting the house at the right price.

Every situation should be viewed as an opportunity. Now is the opportunity to buy!

Ryan Desch