Purchasing a home can be an exciting, frustrating, rewarding, and depressing process — all in the same breath. When you finally find the perfect home for your needs and budget, time may not always be on your side. In other words, if you snooze, you could lose. Because of this, it’s imperative to be decisive and act quickly. However, higher interest rates can make anyone think twice about purchasing a home. Fortunately, higher interest rates may not always be a bad thing. Few people understand this correlation better than experienced real estate guru Stephen Epstein. Read on to learn more.
When interest rates are high, it often causes the cost of homes to decrease. The higher interest rates can price some buyers out of the market, making it more expensive for people to purchase a home. This can lead to reduced demand. To compensate for the squeezed budgets and the reduced demand, sellers are more likely to reduce the price of their homes.
At the same time, a high-interest environment can negatively impact consumer spending and the overall economy. Because of this, consumers are more likely to spend less and save more, which can decrease consumer confidence and slow economic growth. And this can also apply downward pressure on the cost of homes.
As interest rates continue to climb, many buyers are priced out of the market due to higher monthly payments. However, this rise in interest rates is also causing more homes to become available for purchase. Epstein explains, “As of June 2022, housing inventory has increased by 19% compared to the previous year, which provides more options for qualified homebuyers.” And more options with reduced demand also work to drive housing prices down, which can work in your favor if you’re a buyer. In the face of decreasing prices, new homes continue to be listed, while current listings take even longer to sell. These factors contribute to increasing inventory, which are positive developments for buyers seeking a new home.
According to Marr, the average mortgage payment for a newly listed home increased by 25% compared to mid-March 2022. This has led to the monthly mortgage payment for a typical home reaching an all-time high of $2,123. While some homebuyers may cringe at the high-interest rate and corresponding mortgage payment, Epstein often advises his clients to see it as an opportunity. He explains, “The trick is to purchase now and take advantage of the depressed housing costs and increased housing inventory. Then, when interest rates begin to fall, you can refinance your mortgage to capitalize on the opportunity. It’s a true win-win for eligible buyers.”
In his free time, Stephen Epstein regularly enjoys kitesurfing and sailing. He is an active member and volunteers at his local church — the Celebrity Center Nashville, Church of Scientology.