5% mortgage rate...affecting your local market, yet?

Question

Have you guys seen a slow down (i.e., price cuts, a lot longer DOM) in your local market now rate is at 5%? If yes where is your local market? Most markets still have supply and demand issue, but what will happen when mortgage rate hits 7 - 8%?

Thoughts?

Marcus Auerbach · Answer

As of this weekend's round - no. Offers written: we lost 2 offers and scored on 2, which is an amazing success. The ones we lost had 14 and 51 (no joke!) offers, the 2 we scored had 24 and 15 offers. My listing went under contract with 9 offers.

So far it's only a $300 hit for our average buyer, that's a bummer but not a show stopper. At some point this has to slow down, but it is a long way from getting 15-20 offers down to getting 3-5 offers, which is long before getting down to 1-2 offers on the first weekend.

What we need to stop price appreciation is for the multiple offers to stop. Then offers will come in at list price. At that point the price appreciation will be driven still by the seller's through a steady increase of their list prices - but that is way less powerfull as these 15 offer competitions that drive prices 10-15% over asking. And then inventory will start to rise, which eventually means prices will start to level off (not to go down!).

Historically speaking (last 60 years) rising rates never had the power to crash a market. And we have seen rates in the teens in the 80s! If someone wants to buy a house for their family they will find a way, rates are what they are. They may have to settle for a smaller house, partents may have to chip in and they have gained massive equity and will be able to do so..

Home prices in Milwaukee has "only" gone up 12% last year, minus 8% inflation that's a very modest 4%, so as much as I am looking for indications, it does not seem this trend will change anytime soon.

Ron Brady · Answer

In Burlington County NJ, the homes that interest us are flying through the market. No slow down in sight.

Nicole Heasley Beitenman · Answer

Not yet. 5% is still well below historical average. 7-8% IS the historical average. I don't think you'll see a slow down until we get past 8%, but I hope I'm wrong.

Steve Donovan · Answer

No slowdown yet, but people are talking and expressing concern.  In the grand scheme, 5% is still very cheap interest, and in a few years, everyone will be wishing they would have grabbed all the properties they could when interest was "only" 5%  Rates definitely will not be heading back down in the near future; the smart money will be buying now.

Mackenzie Grate · Answer

None yet. Especially not on turnkey homes because there is still a shortage of available contractors and high cost to materials. So anything turnkey that presents itself well is still going fast and over ask. Additionally there are still a ton of cash buyers out there who are simply avoiding any financing issue altogether. So I imagine it will take a bit more time for it to hit, perhaps fall or winter...

Joe Miller · Answer

No slow down in Columbus OH- still seeing tons of offers and constantly over list.

Lane Aakhus · Answer

Haven't seen a slow down in Honolulu.  DOM maybe inching up but prices definitely don't seem to be dropping.

Gregory Chadwell · Answer

Still busy out there and no effect from the rate increase.  If the rate is high, you can always refinance when they drop.  Mortgage rates traditionally follow the 10 year treasury bond interest rate.

5% mortgage rate...affecting your local market, yet?

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