With a spike in the interest rate towards the end of 2016 many of the home buyers are apprehensive what will and how will the interest rate impact the home buying decision.
Below is a graphic presentation of who will be impacted due to rising interest rate in the mortgage.
Why the secondary buyers don’t get impacted?
Secondary buyers are the buyers who are downsizing, moving up into a larger home or buying a second home. The reason is they have been through the home buying roller coaster. Second time home buyers understand real estate is a long-term investment. They understand the financing commitment and advantage of owning a home.
Do note that this group of the home buyers may also be home sellers that have the most anxiety about carrying two mortgages and/or becoming a landlord and/or selling their home to buy the next home. Carry this burden does not deter them with the rising interest rate since their ultimate goal is to own a home where they will live for years to come.
Will the real estate market in Northern Virginia slow down with rising interest rate?
Millennials and first time home buyers are still the prominent buyers in the Northern Virginia area. Some may be less qualified for the purchase price while others may not get impacted with a small increment in the interest rate. The recent positive economic report on consumer confidence does indicate buyers are confident about the economy. Which impacts their spending habits. There are always buyers we come across that will sit on the fence and wait out for the market to react. As you might have read in my past blogs, real estate is a long-term investment.
Whether you pay a rent or own a home you will have to pay for shelter. Just like any other investment real estate will have its up and down.
To leave you will food of thought here is a cheat sheet of historic interest rate in past decade. If you think 4-4.5% is too the high-interest rate you may want to calculate your payments with some high-interest rate we have seen just over the past decade.
And this is one of the reasons why we think the Millennials are confident about their home buying decision despite students loans and other lifestyle expense they may have.
Ritu Desai is a local Real Estate agent/Associate Broker at Samson Properties serving Northern Virginia area of Fairfax, Loudoun & Prince William counties. She has over a decade of real estate sales experience with over $100M in sales. A regular Virginia real estate blogger and serving the Northern Virginia Association of Realtor(NVAR) and Virginia Association of Realtor (VAR). If you are considering buying or selling a home please contact Ritu Desai @ 703-625-4949 or Info@eNOVAHomes.com