With home sales, the purchase price of the home means something different to sellers and buyers. Sellers are concerned with how much their home will sell for.  Buyers purchasing with mortgage financing are concerned about budgeting for the monthly payment.

For Buyers interest rates greatly impact the affordability of a home.
Mortgage interest rates below 3.5%, which had become a standard for the past five years, began to rise at the beginning of 2022.  As we close out the second quarter of the year (June 30) interest rates have escalated to 5.81%.

A rate of 3.5% on a 30-year fixed rate mortgage translates to $4.49 per $1000. A buyer borrowing $200,000 at 3.5% this past December would have budgeted for a monthly loan payment of $898. Borrowing the same amount today will result in a payment of $1175. A difference of $277.

For Sellers, higher rates will push some buyer out of the market.
Rising interest rates make it more expensive to get a mortgage. This lowers demand and competition for homes. As cautious buyers rethink what is affordable, sellers may be presented with fewer offers, which may not be excessively above asking price.

However, sellers shouldn’t worry. There will be a short slowdown as buyers adjust to the new rates, but there are still too few available homes to satisfy demand. Buyers facing ‘mortgage shock’ will also see increasing rental rates and again be budgeting for a home purchase.

Market  View – July 1, 2022
• 556 currently listed homes for sale in the five county greater Lansing area.
• 348  homes have accepted offers. Awaiting inspections and/or appraisal.
• 482 homes are listed as Pending. Have completed inspections and will soon close.
• 3244 homes have closed since January 1, 2022.

Mortgage interest rates
30 year fixed – 5.81% ($5.87 per $1000)
15 year fixed – 4.92% ($7.86 per $1000)