Will Rising Interest Rates Hurt Our Home Sales?
I am divided in my thinking and wanted to know what you experts may be thinking. On one hand my rehabed properties are sold to first time "blue collar" buyers who need jobs (manufactoring/low end service) which are increasing with the improving economy (in my area). On the other hand, these buyers will have a harder time qualifying for a loan to buy my properties. What do you expect to happen in you market and why?
I think cheap money helps everyone short term, but can lead to inflation. We have already seen skyrocketing home prices in many areas. The Fed will only gradually raise rates and only enough to prevent inflation. A stable, slow growing economy is better than a roller coaster one. In my opinion.
yes :-?
The higher the interest rate the hard it is to qualify. Yes it can hurt our home sales.
Well if its harder to qualify, wouldn't that make something like a l/o more desirable. And as the lessor in this situation, aren't you in a better position to profit?
Scott
Interest rates and Inflation (material prices etc.) requires a balancing act.
I have been in the business since 1978.
When interest rates are low....then material prices typically are higher....and vice versa.
Yes, there will be some that will not be able to afford a "larger" house.....but its is more important that a builder can put up a product and make a reasonable profit.
Within the last 6 months, another builder and I built homes using the same house plan.........I increased the my house size by 135 sq. feet to make it more appealing and I included more amenities........to the tune of about $5000.00 or more.
I started and finished my project about 3 month before he did.
We had a meeting the other day and he told me that he was going to have to leave the carpet and appliances out until it is sold because he doesnt have the money to buy those items.
We used the same subs and suppliers....the difference was material prices.
Rising interest rates are a pain......but inflation is a killer.
Any person that says they can no longer afford to buy a home based on current interest rates needs to do a reality check.
Some of us remember 18 -21% rates.
Its a matter of buying what you can Afford.
I think interest rates will slowly go up for the next couple years and stop when inflation is at acceptable levels.
This has been trend since I have been in the buesiness.
NC