Here’s how rising rates impact both buyers and sellers in today’s market.

This year, interest rates have increased as the Federal Reserve attempts to curb inflation. Rising interest rates affect home affordability, so what impact does that have on today’s buyers and sellers?

Suppose you’re a homebuyer who wants a monthly payment of no more than $1,500. With a rate of 4.75%, you’ll be able to buy a home worth $300,000. However, every time the interest rate increases, your buying power decreases. For example, if you could afford a $300,000 home at 4.75%, you’d only be able to afford a $292,000 home at a rate of 5%.

Rising rates also affect home sellers. With buyers’ purchasing power declining, your pool of potential buyers shrinks, and the number of competing homes on the market increases. Some well-priced listings are still receiving multiple offers, though many only get one offer at a time. Sellers need to price their homes strategically and improve their conditions to sell quickly and for top dollar in today’s changing market.

If you have any questions about interest rates in today's market or how it will affect your real estate plans, don’t hesitate to give us a call or send us an email. We’d love to hear from you.