Things are heating up out there, and not in a good way for sellers. The Fed’s interest rate increases have had an immediate and drastic impact on the real estate market, and the paradigm for selling has completely shifted. Long story short – it’s going to be much harder to sell your home now… especially for top dollar. Let’s take a look at how the interest rate increases will make it harder to move your home.
Today’s Interest Rates
In March of 2022, the Fed began raising its interest rate. From March until now, the Fed has raised that rate several more times to the highest level since the 2007-2009 financial crisis.
Impact on Buyers
When the Fed orders interest rate increases, it is immediately followed by the interest rate increases on mortgages. For instance, as recently as June 2021, buyers with good credit could lock in a rate around 2.75%. As of this blog (October 2022) the interest rate is 7.57%. Here is the current interest rate.
In terms of dollars – a $300k mortgage at 2.75% equates to a roughly $1,200 monthly payment. That same mortgage today, at 7.57%, equates to around $2,100 a month. That’s a 75% increase in monthly cost to buyers. Over the term of the loan, these buyers will pay an additional ~$320,000.
Impact on Sellers
With such a massive increase in payments and total costs, a huge contingent of buyers will simply exit the market entirely. With so many less buyers, competition between sellers will immediately increase, which will drive prices down significantly.
Gone are the days of houses being listed and offered on the same day – long gone. Homes will sit on the market for much longer and when they do sell, it’ll be for much less than what they would have gone for just a year ago.
What You Can Do About It As a Seller?
Depending on how long this rate hike lasts, and it could be years, there’s not much sellers can do aside from adjusting their expectations and their plan.
We can’t see the future, but we’ve we went through a similar situation back in 2008. We saw two outcomes:
- For most sellers, their house sat on the market for months, sometimes years, because they refused to sell at the fair market price dictated by the new reality. In the end, these sellers eventually would sell at that price anyway.
- For smart sellers – as soon as interest rates increased, they sold their home immediately for the fair market price.
Both types of sellers exited the market with the similar amounts of cash in hand… but one did it months or years faster. And as they say: time is money! If having cash in hand, fast, is what you’re looking for when in selling your property, we suggest you look to the WeBuyHouses.Com CASH program!
The WeBuyHouses.com CASH Program
Our program is just 3 steps:
Step 1: Contact the WeBuyHouses.com Virginia Team
Step 2: Receive Our Offer
Step 3: Accept Our Offer
The Market Has Changed. Your Selling Plan Should Too.
Selling the traditional way will be much harder until interest rates climb back down. That’s just the reality of the situation. However, with our CASH program, you can still sell your house, fast, and get a fair, reasonable price NOW instead of sitting on the market for months or even years.
If that sounds like a great plan to you – get in touch. Contact the WeBuyHouses.com Virginia team by filling out the forms throughout our site or by calling us directly at 540-202-2004. We look forward to speaking with you!