3 Reasons Why Rising Interest Rates Isn’t a Bad Thing

The rising interest rates have spooked many buyers and sellers from making moves. It’s understandable, it’s the fear of the unknown. The reality is, we don’t know. What we do know is that typically over the long run, property values and rents go up.

With rising interest rates, it is throwing many buyers for a loop. Before, it was about playing catch up with the down payment; by the time you saved up enough to buy, home prices went up, and you need to save up more. Now, it is about having the income, but then rising interest rates occur, and you qualify for less than you did six months ago. The strategy needs to change.

However, there are some good things that come with rising interest rates.

1. It slows down the market. The intention of raising the interest rate was a way to compete against inflation. This means less changes of double-digit price increases, creating calm in the storm that has happened over the last 12 years.
2. With a slowdown, it allows buyers to save up for that down payment. It was tough for buyers, even high-income earners, to save up for the down payment when the cost of rent, gas, and other necessities remain high. With a potential slow down, it gives buyers a little more time to save up.
3. The slow down creates predictability in the market, which is great for real estate investors. All investments have risk. Real Estate is one of the safer investments because having a roof over your head is a necessity, you can leverage it, and you can improve it on your terms. However, there was so much volatility it made some investors nervous. Slowing down the market creates predictability in the market, making it easier to make investment decisions.

Of course, no one can truly predict what’s to come. We can use history as a predictor and ultimately comes down to supply and demand (which right now we have a lot of demand and limited supply). The best thing you can do, buying, selling, or investing, is to talk to the necessary professionals in the real estate industry that truly know what they are doing and go from there.