Tips & Trends for the Flagstaff Real Estate Market:
Past Articles [June 2003]
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The Effect of Rising Interest Rates on Flagstaff Real Estate
As many of you are aware the past few weeks have seen a substantial rise in interest rates. In mid to late June rates for a 30 year loan were at approximately 5%. As of this writing they have increased to above 6%. What happens to our real estate market when interest rates rise?
Higher interest rates can slow down home sales while lower interest rates tend to stimulate sales activity. Buyers like low interest rates because home loans cost less and they can afford to buy more. When interest rates increase, homes and loans are less affordable.
But take heart. If you have been one of those people sitting on the fence trying to decide if you should buy, consider that interest rates may increase even more. With rates in the 6% range you can still buy a lot of home for your money. If you do not plan to live in the home for more than 7 years you may consider an adjustable rate mortgage. You can still find an adjustable rate loan in the 4% range.
If you have been thinking of selling your home now may be the time. If rates continue to go up you may find it harder and harder to find qualified buyers.
This summer’s market has been red hot in Flagstaff. Unless rates go up significantly I don’t anticipate any slowdown in the near future.
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