Real Estate Myth: Rising Interest Rate will Reduce Home Value.

Real Estate Myth: Rising Interest Rate will Reduce Home Value.

We're getting this Myth, we're hearing this crazy myth about increasing interest rates are going to reduce our home values. Is this true? Welcome to another episode of Myth Versus the Truth.

We have to think step by step. Now, the question is, what really happens when the interest rate goes up? When the interest rate goes up, what happens is the affordability goes down, such as your monthly payment will increase and you may have fewer buyers on the market. So let's talk about inventory. This is happening, yes, affordability is a little bit low, but inventory is also low. So you might not have 10-15 offers on a home. Maybe this time we'll have 7, maybe 5. But these are true buyers. These are the ones that can buy right now. So what do you think? The price will go down?

Now here in beautiful South Florida, you have so many people moving down. We have people coming from out of state, the foreign investors. We get I mean from everywhere, guys, just think about it. Right now, South Florida has been the hot spot. And inflation, that's global, they're feeling it all over. Now in South Florida, you are getting the traffic that we need to sustain the home values.

Also, don't forget about the rental market. The rental pricing is so high, but they have to live somewhere. Now they have a choice to make. Either they keep on renting and paying the high and high and high rent prices, or lock down a mortgage, principal, interest, and taxes, together with the escrow. A fixed mortgage for 30 years, is less headache. So that is another market.

Regardless, even though the interest rate goes up a little bit more, we're still going to have multiple offers on those properties. Hearing all the information, I also want to add that years ago we saw interest at 18 or 19%. So seeing 6% is nothing. We still have a low-interest rate. What do you think? So I hope you guys found this information useful enough to break that myth and help you pursue the home-buying dream. Thanks for watching. See you next week in another episode of Myth versus the Truth. 

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