Remember the post from last July [see: Time to Sell Your Home?] regarding the effect of rising interest rates on housing prices?
With mortgage rates at 2.60% at the time, we did some simple calculations to show the impact of an increase in rates to as high as 6%. A $1 million house with a mortgage payment of $4,203, for instance, would need to drop to $667,733 in order for the payment to remain the same for a new buyer.
With inflation spiking, we felt it was only a matter of time before interest rates shot higher too.Don’t look now, but the future is here. The pundits say that about one-fourth of all sales are to cash buyers, so higher rates won’t necessarily matter. Maybe. But, nearly every crash in the history of the markets has started with the words “this time is different.”