This blog post is written by our Chief Economist Matthew Gardner at Windermere Real Estate and originally posted on the Windermere site here: https://www.windermere.com/blogs/windermere/posts/5-reasons-rising-interest-rates-won-t-wreck-the-housing-market
I found the content too valuable not to share on my own blog!
5 Reasons Rising Interest Rates Won’t Wreck the Housing Market
Written by Matthew Gardner, Chief Economist, Windermere Real Estate
Interest rates have been trending higher since the fall of 2017, and I fully expect they will continue in that direction – albeit relatively slowly – as we move through the balance of the year and into 2019. So what does this mean for the US housing market?
It might come as a surprise to learn that I really don’t think rising interest rates will have a major impact on the housing market. Here is my reasoning:
1. First Time Home Buyers
As interest rates rise, I expect more buyers to get off the fence and into the market; specifically, first time buyers who, according to Freddie Mac, made up nearly half of new mortgages in the first quarter of this year. First-time buyers are critical to the overall health of the housing market because of the subsequent chain reaction of sales that result so this is actually a positive outcome of rising rates.