Who’s Still Buying and Selling With Mortgage Rates Rising

By Rachel Puryear

With mortgage rates now rising again after years of historically low rates, many experts are predicting a slowdown in the housing market – though there’s some debate as to what extent that will happen.

The reasons behind this prediction include:

  • Homeowners are less incentivized to sell, having locked in low rates, when buying a new home would mean taking on a higher rate.
  • Some would-be buyers are now priced out of getting a mortgage, as one at a higher rate would cost them more than it did before – as well as disqualify them because they would no longer meet strict debt-to-income ratios.

What’s interesting, though, is that even with the market slowing, inventory remains low.

Reasons behind low inventory include a population growth that exceeds the housing development (exacerbated by zoning laws intended to keep it that way), and increasing numbers of older homeowners choosing to age in place (they likely have lots of equity to tap, while selling would mean a big capital gains tax).

Nevertheless, there will still always be buyers and sellers. There are some buyers who will be less affected by rising mortgage rates than others, though; as well as sellers who will want to make the sale regardless. Let’s explore who each of these might be.

A young family looking at their new home from outside, with a “sold” sign in the window, and the father pointing towards the home.

Buyers Who Will Still Be Buying

Cash Buyers/Investors

Buyers able to pay in all cash won’t be concerned with rising mortgages rates, as they won’t need a mortgage.

Cash buyers are frequently investors who want to rebuild fixer-uppers, and resell them at a profit – also known as flipping.

If you want to sell a house that has a lot of deferred maintenance, will need a lot of work, or looks and feels dated; a cash buyer looking to flip houses might be interested, even if traditional buyers are a little less so.

Homeowners With Adjustable Mortgages

Homeowners whose mortgages have an adjustable – or variable – rate might see their monthly payment rising soon (depending on the terms of the note).

If that’s the case, they might not be incentivized to remain in place by a fixed rate.

Sellers Who Will Still Be Selling

Trust/Probate Sales

People who inherited a property via a trust or a probate proceeding will often want to sell it – especially if there are multiple beneficiaries to divide the estate amongst.

If they’re selling, they will likely do it sooner rather than later – they want their proceeds, and don’t want to keep paying to maintain it if they’re not going to hold onto it.

Homeowners With Adjustable Mortgages

Again, with these homeowners not having as much incentive to remain in place as those with fixed-rate mortgages, the former may be more inclined to sell and move than the latter.

Accordingly, if you’re wanting to buy and/or sell a home, but are concerned about whether that’s still viable in this new market; be assured that it very much is.

Even if the market is cooling somewhat, it was super-hot before – so there’s still plenty of activity, and there will always be buyers and sellers out there.

Looking for a great realtor to help you buy or sell? Contact me here, and I’ll help refer you to a great one.

Thank you, dear readers, for reading, following, and sharing. Here’s to finding solutions in a tough market.

Got a question you want answered through this blog? Submit your question to me here – and if you don’t already, please request to subscribe to the Free Range Life bimonthly newsletter while you’re there!


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