A lot of my clients are wondering, how will rising interest rates hurt Tooele County home sales. I wish I had the definitive answer.
No one does for sure. What we have are educated guesses from a variety of folks that generally have an ax to grind. And that includes me. What we have are opinions, and historical data to help influence our opinions.
I tend to look favorably on articles that predict impending doom if mortgage interest should start climbing. My logic is sound and I might even say “my heart is pure”. Rising interest costs for my buyers…… mean
- Bigger house payments.
- Fewer houses that my home buyer qualifies for.
- Selection of homes in affordable price range are less interesting.
But… since I know that no one can predict exactly what will happen if the cost of money goes up I’m not going to try. What I will do is let you know what happened the last time there was a significant uptick in financing costs.
Then when we talk about getting you and your family a new home we have a basis to discuss how fast we need to move.
To do that, I want to use an article that I found at Keeping Current Matters that talks about an article published in MR REPORT about what happened during previous periods of increasing money costs.
This is important, it talks about what has happened a few years ago when buyers got caught in a period of escalating money costs. if you are thinking of buying and financing a house in Tooele County you need to read this, save it and pull it out whenever you head out to look at houses to buy.
If you don’t have time right now, I’m going to go over the hot points.
Historical Look @ Higher Interest Rates
- Between 1977 & 1981 the mortgage market was as high and as unstable as anytime in history.
- In 1981 interest rates were 18% on a 30 year fixed rate mortgage.
- This was the most dramatic shift in 50 years.
- Home Mortgages fell nearly 40%.
- Sales of single family homes down 36%.
- New construction housing starts down 51%.
- Home sales slipped, home starts stalled.
How Are Builders in Tooele Affected By Interest Rate Increases
- New home builders doubly affected as builders needed to also borrow for cost of construction.
- Home builders hit with loss of demand and increase in costs.
Conclusions Regarding Mortgage Rates In Tooele County
- If mortgage rates stay the same, home sales should increase 5 to 10% this year.
- If rates increase 1.5%, Freddie Mac predicts housing loans to fall by as much as 30%.& sales to drop 5 to 11%.
- Housing market could show modest growth with higher rates if household income would increase proportionately..
In its latest Insight report, Freddie Mac examines a period that saw skyrocketing mortgage rates to examine the worst-case scenario and predict where rates might be headed this year. » READ MORE
There you have it. A pretty complete article about what has happened when the cost of money goes up, up, up.
I hope by now you are understanding why I felt it was important to pass this information on. If you were thinking of buying in Tooele UT we had better get cracking.
I’d like to work with you. I can show you every home listed for sale in Tooele County . And, because I’m local and have been doing this for over 20 years I may have been inside and can tell you about it. In fact since I blog about the state of the real estate market out here almost every day, I may have written about. (check out my blog).
In any event, if you are interested, give me a call, Berna Sloan 435-840-5029. I know stuff about Real Estate in Tooele County, and I think I can answer the question about “will rising interest rates hurt Tooele County home sales”.