Quote:
Originally Posted by Ian_Lee
The 30-year mortgage rate has jumped up by 0.34% since Trump was elected. And many pundits (of course they can be wrong) predict that interest rate will be rapidly normalized (meaning hike of 1 1/2 -2 % in a relatively short period of time).
Interest rate is not the only determinant in housing market but can be a very important factor.
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Interest rates going up make it more expensive to borrow and prevent people from even securing a loan if they are on the margin. This reduces bidding wars and homes sit longer on the market.
If someone has their home on the market just for kicks then they can keep it inflated but if they really need to sell it the prices WILL come down when huge swaths of people are cut out of the market.
Of course the guy just trying to get a huge amount will be forced into a FSBO situation because no one will sign a contract with him for an unrealistic amount. Of course the contracts are typically for a year but if I were a realtor in this climate I would do 3 month contracts because proper price points could be swinging quite rapidly and I would not want to be tied up with some guy who refuses to lower price to reflect reality. A realtor does not make money if they are not selling.
Until the masses are cut out of the market sellers will still enjoy a sellers market though. 0.34% is not going to cut it.