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The number one question I've heard recently is, "What can I expect from real estate in 2016 with these rising interest rates?"
Buyers, you are going to lose some buying power. For example, if you were going to borrow $300,000 at 4%, your payment would be $1,432 over thirty years. However, if rates went up to 5%, your payment would be $1,610 over thirty years. That might not seem like a big increase, but if you wanted to stay in that $1,400 range for monthly payments, you're looking at a $33,000 decrease in buying power. That's just with a 1% raise!
The Fed is talking about raising the interest rates by 2.5% in 2017. We could see prices start to fall off in real estate as rates increase. Higher rates could also could be the difference in getting a home with that extra bedroom. You may have to look at three-bedroom homes instead of four-bedroom homes. There are certain things you have to consider as your buying power goes down.
However, we do know what the rates are right now. Those low rates give buyers a sense of urgency. Find a home this spring before your buying power starts to diminish. Now is a great time to buy your first home or move up into your dream home.
If you have any questions, please don't hesitate to give me a call or send me an email. I would be happy to help you!
