Real Estate Agent · Cumming, GA · Member since 2016 · 74 posts · 10 votes
Hello!
I am trying to buy my first single family home in the Phoenix area (Gilbert - to be specific) but as the news come around about the interest hike, I am hearing and reading a lot of stories about holding off in buying since a hike in interest rate will cause the builder to lower the base price of new home construction.
Investor · North Bend, WA · Member since 2016 · 30 posts · 20 votes
9y
I agree with the above posts. The interest rate increase was so minimal that the pricing of mortgages will barely move. I doubt that any contractor will lower prices strictly from this minimal interest rate hike.
Rental Property Investor · Lake Worth, FL · Member since 2016 · 29 posts · 16 votes
9y
Hey @Niraj S., developers / builders may drop their prices in reaction to an interest rate hike, but that assumes the rate hike takes buyers out of the market since the cost of a mortgage went up. However, if the rate hike just slows down other aggressive buyers, then they may not drop prices...especially since the rate hike was small (~0.25%).
Bear in mind, I'm not specifically familiar with the Gilbert market though.
Real Estate Agent · Cumming, GA · Member since 2016 · 74 posts · 10 votes
9y
@Suhan Junaid - The Gilbert market is a high income area so a 0.25% shouldn't make much of a difference as far as affordability is concerned but on the same token i see a lot of builders doing construction all over town so there is definitely competition for prices.
Broadly speaking, increases in rates reduces purchasing power so should be negative for pricing. There is also an angle that buyers might want to lock in a rate on a new purchase so that might pull some demand forward a bit which would be positive for pricing. At the high end, my guess is not much of a difference.
Investor · North Bend, WA · Member since 2016 · 30 posts · 20 votes
9y
I agree with the above posts. The interest rate increase was so minimal that the pricing of mortgages will barely move. I doubt that any contractor will lower prices strictly from this minimal interest rate hike.
New York City, NY · Member since 2014 · 15 posts · 4 votes
9y
The increase is insignificant to a retail borrower at the 4%-5% range. It has huge bigger impact in the institutional credit markets where billion dollar debt is issued. I dont think a slight uptick will impact retail mortgage borrowings which impact housing prices. It may however impact the high end luxury homes.