It’s hard to escape the talk about rising interest rates and how they’re supposedly scaring away potential homebuyers. So if you’ve been thinking about selling, there’s a good chance it might be causing you to put those plans on hold and wait for buyers to re-enter the market.
But before you put your home sale plans on hold, there’s a timeless truth that bears repeating: there are always “life happens” buyers in the market looking to buy a home, as Marketplace recently reported in this article. While interest rates are a significant factor, they don’t deter everyone from pursuing their dream home.
Here are some examples of “life happens” events that cause people to buy a new home:
- New job opportunities: People are always being relocated by companies to new areas, and they’re often given a “relocation package” to help them buy a house in the new area. But it doesn’t even have to be an out-of-state move that causes someone to buy; they could just be getting a much better paying job and they now have the financial capacity to invest in a larger or more desirable property.
- Need for more space: Growing families, the desire to accommodate aging parents, or simply a need for additional living space can drive the decision to buy a new home.
- Access to better schools: For families with children, the quality of local schools can be a motivating factor to purchase a new home in a specific area.
- Less competition: Some buyers who struggled to successfully buy a home in the past due to intense competition are seizing opportunities as the market evolves.
- Getting married: Whether it’s a first marriage, or a couple on their second trip down the aisle, starting a new life together often involves buying a house together.
- Getting divorced: Unfortunately, some marriages don’t last, which can cause one household to become two, causing at least one of them to buy a new home, if not both of them.
- It makes more financial sense than continuing to rent: Rent isn’t always less money per month than buying a home, and even if it is, rents continue to rise and people become aware that they are not building equity by owning a home.
- Security and stability: Owning a home provides a sense of stability, preventing renters from being at the mercy of landlords when leases expire unexpectedly.
- Downsizing: As empty-nesters or retirees, some individuals choose to downsize, selling their larger homes to buy smaller properties.
- They came into some money: Receiving a financial windfall, such as an inheritance, a significant bonus, or even a lottery jackpot can prompt someone to buy a new home.
It’s important to remember that interest rates are just one piece of the puzzle. Sure, it may deter some buyers, but people buy homes in every real estate market, regardless of the interest rates for a variety of reasons. In fact, buyers who are in the market now despite the rates are likely highly qualified and motivated, making this a perfect time to capitalize on the market.
There Is Still High Demand and Low Supply… for Now
It’s also important to note that there is still a significant demand for homes in many areas. The limited inventory of homes for sale continues to create a competitive market. So, if you’re contemplating selling your home, you may find that you can still get a premium price for your home, and sell it quickly in many areas.
While the current real estate market remains favorable for sellers, there are potential challenges on the horizon. One factor is the Federal Reserve’s active efforts to influence the housing market through interest rates. The Fed’s commitment to ongoing intervention suggests that the market might continue to fluctuate.
Another looming factor is the aging Baby Boomer generation. As they approach retirement age, projections are that more of them will put their homes on the market, which could significantly increase the amount of homes for sale, creating more competition among sellers and potentially lower sale prices.
So, if you’ve been hesitating to list your property thinking that it might be smarter to wait until interest rates come down and more buyers flock to the market again, it might be time to reconsider. There are always “life happens” buyers in the market, and your house may be the home they’ve been desperately waiting to see come on the market.
The Takeaway:
Rising interest rates have certainly priced some buyers out of the market, and made others take a break from their home search hoping that rates will come back down. In turn, this may cause some potential sellers to not list their house for sale, and wait for buyers to re-enter the market.
But there are always buyers in the market, regardless of interest rates, because life events cause them to buy a house. Considering there is still high demand from buyers and not enough homes to satisfy that demand in many markets, it’s a great time to sell now, rather than wait for the market to potentially shift in buyers’ favor due to move the Fed is making, or because of a large number of listings hitting the market due to Baby Boomers in the near future.