With the dramatic increase in interest rates buyers who obtain a loan now have less purchasing power than they had a few weeks ago. How will that affect the housing market?
In Boulder County, Colorado, and especially in Boulder, Colorado, we have seen a preponderance of cash deals. Obviously cash buyers aren’t adversely affected by the increase in interest rates. In fact, this increase could work to their advantage as they aren’t competing with as many buyers who get a loan.
Boulder and Boulder County are very popular with out of state buyers. With the influx of Californians and the residents from other states who come to Colorado with cash in their pockets ready to buy a house, I foresee Boulder County to not be as adversely affected by the increases in interest rates as other areas. However, more price reductions and longer days on the market are occurring now than in the past few years.
Another consideration is the downturn in the stock market. Even at today’s real estate prices and interest rates, purchasing property is a wise place to shelter your money. With fewer people able to afford to purchase a home, the rental market will become saturated with more people trying to rent, giving landlords an opportunity to get a better return on their investment.
Homeowners who are considering selling in the near future would be wise to put their homes on the market sooner rather than later to take advantage of today’s prices. However, if you are selling and have extra cash after the sale, buying an investment property with the extra funds might be advantageous.