Just recently, Federal Home Loan Mortgage Corporation aka Freddie Mac shared an Insight Report titled No place to go but up? All about the way in which rising mortgage rates could affect real estate and the market, including the Sedona real estate market. The statement focused on the effect the forecasted rise in home loan interest rates might have on the housing market this year.
Some think an increase in mortgage rates may cause a slowdown in buying of homes in Sedona Arizona which would, subsequently, create a fall in Sedona real estate values. Inevitably, however, price is based on supply & demand even though rising mortgage rates might slow down demand from customers, in addition they influence supply.
From the report:
“For today's home owners, the decision to invest in a new home is often associated with their decision make a sale their existing home. Because of this association, the loans costs from the existing mortgage loan are a part associated with the homeowner’s decision if it makes sense to sell.
If the existing rate (we'll assume fixed rate) exceeds the interest paid for an existing bank loan, the potential home buyer would have to leave behind a below-market mortgage to sell.
The homeowner might choose to hold off both the sale of their existing home and purchasing of a new home to keep the beneficial interest rate.”
The Freddie Mac analysis, on acknowledging this example, concluded that pricing is not necessarily adversely stricken by increased mortgage rates. They explained:
“While demand for homes may slump, there is an linked slide on the supply with homes with the association between the buying and selling decisions. As both the supply and demand move in concert in this manner they have offsetting effects on lowered demand diminished selling price and reduced supply raises price.
They went on to show that the Freddie Mac National Home Price Index was
“…unresponsive to changes in mortgage rates. In the present housing market, the driving force in regards to the increase in selling prices is often a reduced supply with both completely new and also resale homes coupled with generally rates that are low. As rates on mortgages rise, the need for home purchases may continue being good relative to the confined supply and continue to set upwards pressure upon house prices.”
The following information, depending on facts within the article, unveils what happened to house prices the past six occasions mortgage rates increased by no less than 1%. This is consistent with the Sedona real estate market as well.
Freddie Mac Increasing Rates On Mortgages Really Don't Lead to Falling Home Prices
Regardless if you are a move up buyer or first time home buyer, holding out to invest in your next house based mostly upon the belief that values may drop on account of increasing mortgage rates can make absolutely no logic.
If you're looking for a mortgage lender, we maintain a list of local professional Sedona mortgage lenders.