I recently found this graphic when doing some research on home buying and the relationship with interest rates. It made me stop and think about what is the true lesson here.
Now, you can draw many different ideas from this and I would love to hear what you think but the one that hit me was Move Up Buyers. Here in San DIego, I am fascinated by this opportunity.
Move up buyers present great opportunities for real estate professionals since they can work on two transactions at the same. This can be very lucrative and also quite fulfilling helping someone achieve their dreams.
With a rising value in the marketplace for someone's home, this gives that "seller" of their home plenty of equity on their next purchase which can keep their payment in a comfortable place for their budget.
Now, the other takeaway for me is that of the First Time Buyers being that affected. What has helped me educate my clients is looking at the rent vs. own equation. What will the first time home buyers rent payment look like in 2 years? 3 years? Here in San Diego, the rent vs. own discussion is so heavily slanted to owning due to the low cost of money and the very high rents.
I was not surprised by the second home and luxury buyers being least effected by interest rates rising since many of these transactions are cash.
One final statement is that I don't think rates truly affect us here in San Diego until the mid 5's. This is when the monthly payment starts changing pretty dramatically and will effect qualifying. I would love to hear what you think.