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Our team continues to analyze the marketplace and provide buyers with the latest information on the trends we revealed. It’s critical to consider homebuyer sentiment within the real estate industry, as this is a leading indicator on the areas of concern. The latest data shows that rising interest rates are a top concern for the modern homebuyer. Within this latest post, we’ll explain the reason behind this challenge and how homeowners are adapting to this new market environment.


According to a new Zillow Group Mortgages survey, rising interest rates are the leading factor impacting the ability of homebuyers to purchase a property. Interest rates rose in late December following the U.S. election and the data now indicates that further interest rate rising could take place in the short-term. This is set to impact home pricing and means that many buyers are now worried they simply won’t have the financial backing to purchase in the coming years.


Despite the rise in interest rates and the potential additional costs for purchasing a home that might arise as a result, the Zillow Group Mortgages survey shows that many are still looking to purchase a home in the United States. 83% of those surveyed are still set to buy a home in the next three years, and 49% said they would move forward with a home purchase, even after potential future interest rate rises took place up-to $200 per month. It shows that most people still believe that owning real estate is valuable for their long-term financial well-being.


One development that has taken place as a result of the rising interest rates is the change in the target market for buyers. While most will still be purchasing a home in the near future, the type of homes they will purchase might be different had interest rates not changed. 25% of buyers surveyed said they would reconsider the type of home they purchase, should their mortgage rates increase by $100 per month. If these rates rise by $200, 63% of shoppers would consider the type of property purchased and may opt for smaller, more affordable options to mitigate the impact of rising rates.


In order to analyze the true impact of rising mortgage payments on the average buyer, it’s important to delve into the market data. The average U.S. home priced at $195,000 has an average mortgage rate of 4%. An increase of .25% on the rate would lead to an increase in mortgage payments by just $23 a month. It’s important to note that those who will struggle the most should rates rise are those in large cities where real estate is at its most expensive. For example, in San Francisco, the average mortgage could increase by $400 per month, if rates rise to 5% in the near future.

By understanding this data and including it in their calculations, buyers can make more effective purchase decisions in 2017 and beyond. To learn more on the data, call our team now at 949.392.5600.

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More than ever, a trusted real estate advisor is integral to wealth management. Stanfield Real Estate looks forward to earning your family’s trust and leveraging our success for your benefit for generations to come.