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Rising mortgage rates and the impact on real estate markets

As rates begin to shoot upward, many homebuyers have been feeling pressure to close the deal fast, and for a low price that they can still afford.

In March, average interest rates climbed to 4.72% for the week ending April 8, according to Freddie Mac. This is the highest level mortgage rates have seen since the onset of the COVID-19 pandemic.

“Economists expected mortgage rates to rise in 2022, but almost none expected them to rise as quickly and as high as we’ve [already] seen this year,” says Wolf. “As mortgage rates go up, buying power goes down.”

While homes nationally spend an average of 38 days on the market before selling, properties in the 20 hottest markets are getting snapped up in just 25 days. That’s eight days faster than this time last year. Homes in the hottest market of all, Manchester, NH, sold in a mere eight days on average.

Rising rates are possibly propelling the growth of more affordable Midwestern markets. Properties in La Crosse and Topeka remained on the market for a mere 14 and 17 days respectively.

All in all, spring might contain a few glimmers of hope but is slated to remain a tough market for homebuyers who will need to act fast and bid high.

Listings Unlimited

“There’s a lot of demand and little inventory for the lowest-priced homes across the country,” says Wolf. “And the increased competition may only drive prices a bit higher in the short run.”

Image from Pexels.

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