Answering the 2 Main Questions We’re Receiving
How interest rates and the situation in Ukraine may affect buying power.
As we move into the spring market, people have been consistently asking me two key questions about the market. The first is, “What will happen with interest rates?” The second is “How will the Russian invasion of Ukraine impact our economy?” As it turns out, the answers to those two questions are tied together.
It’s difficult to predict what interest rates will do. Rates were increasing based on what the Federal Reserve was doing, but now they’re looking at the situation unfolding in Ukraine and may have slowed their upward trend of interest rates. However, we can’t ignore that a year ago, rates for a 30-year mortgage were around 3%, whereas they’re currently 4.5%. If you have a $250,000 loan, that adds over $200 per month to your payments. Interest rate increases can greatly affect your mortgage payments.
Inflation raises the price of everything, and that affects buyers’ purchasing power. Right now, gas is $1.50 more than it was a year ago in many places, potentially increasing your monthly gas costs by as much as $75.
"Interest rate increases can greatly affect your mortgage payments."
When is all of this going to slow buyer demand? That's what we're waiting to find out these days. We haven’t seen an immediate impact; home supply is still low, demand is still high, and we’re moving into a very strong spring market.
If you have any questions about the value of your home, you’d like to schedule a showing of a home, or you’d like to be set up on a search for homes to buy, please call, text, or email me. I would appreciate the opportunity to serve you.