Rising Interest Rates Spell Changes for Homebuyers and Sellers

Colemere Realty and Associates Real Estate Podcast

We lose purchasing power as interest rates rise. Let’s talk about what this means for you. As you may know, the cost of financing a home has been going up. The Federal Reserve has been raising interest rates in recent months, and with more increases on the horizon, today we’ll be talking about what this means for you as a buyer or seller. Utah’s economy is growing rapidly right now, partially due to our many great job opportunities. The Fed will take this into consideration when they increase interest rates, which subsequently affects our housing market and available opportunities for homebuyers and sellers. As rates rise, buyers can’t qualify for the same homes they previously could. For sellers, this makes it important to sell homes quickly. Because the buyer pool for your home will begin to drain due to increased interest, you won’t be able to get as much for your home and fewer buyers will qualify to begin with. “There’s a direct relationship where we lose purchasing power as interest rates rise.” Similarly for buyers, the amount you can qualify for is lower. There’s a direct relationship where we lose purchasing power as interest rates rise. If rates lowered, we’d see an increase in purchasing power, but this is incredibly unlikely to happen. This is illustrated on the graph below. Feel free to reach out to us if you’re looking to buy or sell a home, have any questions that you’d like answers, or would simply like some further information. We look forward to hearing from you.