Increased Interest Rates Bring About Lower Home Prices

The big news last week was the Federal Reserve announcing the largest interest rate increase since 1994. The downside to that is monthly mortgage costs may have gone up hundreds of dollars in one week. But for house hunters, there’s still a bit of an upside.

Some of the Fed’s three-quarter point increase was already priced into lenders’ rates, which went above 6% before the Fed announcement. The mortgage rate even declined a smidge a day later. That means it actually may be easier to buy a house for those who’ve been shut out in the past two years because they were getting outbid.

While it’s still a seller’s market, as these changes occur, buyers are getting more of a say in the process. Agents are setting the expectations with sellers that their house probably won’t sell on day one. They may not get 12 offers. They probably shouldn’t be pricing at market plus 3%.

Obviously with the rate increase, it’s more expensive to get a loan for the same-priced house today than it was last month. But for those buying a house for the long term, it’s still as sound an investment as it ever was.

If renting is a more manageable option for you right now, keep in mind some cities’ average rental prices are way above the rest. Superior, Highlands Ranch and Castle Rock are among the most expensive cities to live in for renters, with the average rent in Superior through May at $2,399. That’s $810 above Colorado’s average and $1,056 above the national average.

In contrast, Greeley, Englewood and Colorado Springs are among the cities with the lowest rent prices. While it may seem like the real estate climate in Denver is constantly changing, becoming a homeowner is both possible and still a solid investment.

While it may seem like the real estate climate in Denver is constantly changing, becoming a homeowner is both possible and still a solid investment.

If you’re ready to see what you can afford and what’s available, give Metrowest a shout. We’d love to discuss your options!