Rising interest rates have been a hot topic lately. Everyone from first-time home buyers to seasoned investors is wondering what rising interest rates will mean for the housing market.
For home buyers, rising interest rates can mean higher monthly mortgage payments. If you’re in the process of shopping for a home, it’s important to factor in rising interest rates when budgeting for your new home. Many experts believe that rising interest rates will lead to a slowdown in the housing market, so if you’re thinking of buying a home, it may be beneficial to do so sooner rather than later.
For sellers, rising interest rates could mean more buyers are hesitant to purchase a home. If you’re thinking of selling your home, it’s important to be aware of this and factor it into your asking price.
How Does This Affect the Mile High Market?
According to the Denver Metro Association of Realtors, the metro area’s housing market saw the average price of a single-family home in the metro area soar to $825,073 in April 2022, a 3.93% increase from March.
The higher interest rates are already having an impact on the amount of inventory on the market. While Denver Metro still has low inventory, the word “historic” is no longer relevant because there were 610 fewer properties for sale last year than today. The market usually sees an 8.59 percent increase in month-over-month inventory. But, amazingly, it saw a 44.26 percent increase during that time frame.
While supply has greatly increased, so have prices. The average price of a single-family detached home is up 3.93 percent over March. After consecutive months of increased prices and interest rates, monthly mortgages have increased dramatically also.
Predictions for the Denver Market
Increased interest rates and a desire to sell when the market is hot, before prices drop, are expected to draw more sellers to the market. It’s expected that homes will spend longer on the market as a result of rising interest rates and people wanting to sell their houses while they’re still hot. The longer a property sits on the market, the stronger your bargaining position as a buyer becomes.
With more stock, you have a wider range of alternatives and less rivalry among purchasers. We won’t see the bidding battles we’ve seen with properties selling for tens of thousands above the asking price when that happens.
No matter what your situation is, rising interest rates are something to be aware of. It can impact your buying power or the buying power of those who would like to purchase your home. If you have any questions about how rising interest rates could affect you, be sure to speak with a qualified financial advisor.