Where is the market about to go?

The 30 year fixed interest rate has moved above 5% for the first time in more than 3 years. Borrowing money now costs almost double what it did 6 months ago.

What will this do to our local Real Estate market?

Will it cause the market to eventually correct? Will we see a massive downturn?

I think not in the near future.

Three things to keep in mind:

1.) We were insanely spoiled with interest rates under 3% for almost a year. I advised everyone I knew that had a 4% or higher rate to consider refinancing if they were planning on staying long term. I was fortunate enough to lock in a 2.75 rate on my own house.

2.) 5-6% mortgage rates feel high right now, but historically these are still fantastic rates, and most people can still handle the monthly payments. Look at the chart above.....even at 5% we're still historically unbelievably low. And the trend for the last 20 years has been a downward one....

3.) I have noticed a huge amount of our transactions have had buyers either paying all cash, or putting massive down payments on the order of 50-60% of the purchase price. These lower loan amounts obviously limit the interest damage to the borrower. The payments are still affordable...or non existent.

Demand for Texas Real Estate appears to remain pretty high. Until we see inventory levels rise and stop seeing homes sell the first weekend with 5-10 offers, it appears its going to stay that way for the near future.

I'd love to hear your thoughts on where you think the market is headed.
Feel free to hit reply. I'd love to hear from you!

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>> Link to today's prevailing rates <<

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