As interest rates increase, we know for a fact that affordability will change. To Buyers, the true cost of a home is determined by the price of the home, plus the cost of financing that home.
Borrowing $500,000 at a rate of 3.5% would have cost you $2,245/month this year with a 30-year mortgage.
The same $500,000 would cost you $2,533/month in 2017 if we see rates go to 4.5%
That $288/month could be the difference in getting approved for a loan or having to adjust your home budget and make sacrifices.
So it makes sense that some people would assume home prices will come down to attract the same amount of Buyers as in the past, but history tells us different. As rates increase we’re expecting that market to be even more competitive this year.
Visit here to see historic rates and the changes in home prices!