Summit County Realtors Predict Impact of Rising Interest Rates on Local Home Buying Market
Earlier this month, the Federal Reserve announced a quarter-point interest rate increase in order to combat the highest rate of inflation observed since the 1970s.
The move is intended to balance the economy, and as the Fed implements measures like this, some Summit County realtors are bracing for the effects these hikes will have on the real estate market.
Most agree: the types of buyers who will feel the effects of this interest rate hike first are likely to be first-time homebuyers and local buyers.
Frisco-based real estate agent Jeannette Thompson, Gongloff Group, said last year was the company’s best year for sales, and she can’t imagine it was any different for most businesses. Sure enough, Coldwell Banker Mountain Properties agent Annie Markuson and Omni Real Estate agent Philip Mervis said the same thing.
Last year was a banner year for the real estate industry. While all of these agents said year-over-year sales growth would likely slow, they didn’t necessarily think the new interest rates would stop second-home owners from buying properties in the county. Summit – at least not right away.
“I feel like there will still be growth in home values, and there are still a lot of eager buyers – a small handful who are local – who still haven’t found their loved ones’ homes. dreams,” Markuson said.
Mervis said it’s hard to predict what will come from the additional interest rates. He said the industry was currently in “uncharted waters” given foreign conflicts overseas and communities were still recovering from the pandemic. Despite the uncertainty, he guessed that second home owners and investors, who can afford a “healthy down payment,” may be less affected by these rate increases than the local population of Summit County.
“With the confluence of potentially higher property taxes – house prices are still likely to rise, even if that percentage is lower this year – and then higher monthly mortgage payments due to the rise interest rates, it all points to higher costs for the local buyer,” Mervis said. “However, I don’t think we’ve seen the same rate of growth in local incomes that people are getting from local employment. They certainly do not correspond to the increases.
Markuson is also concerned about the impact of these hikes on local people. She noted that Summit County isn’t always an easy community to live in long-term, and housing has long been a struggle, especially in the past year. She said these rate increases would not make things any easier.
“We really have to keep our local workforce in mind because without local workforce we don’t have a community,” Markuson said.
Thompson noted that while local buyers will be immediately affected, these types of buyers still represent a smaller portion of the overall buyer pool. A large majority of Summit County real estate is purchased by second home owners or investors.
Thompson said these interest rate increases take effect during the county’s transition season, and that time of year is usually when sales start to slow. It’s at the end of May that they start picking up again, and that’s when Thompson said buyers looking to buy a second home might pause or think twice about whether they whether or not they want to pay more for a property. Thompson estimated that about 40% of sales in the county are paid for in cash, with the remaining 60% purchased using some sort of loan.
“Right now – just because it’s changed, transitioned – any kind of shock causes our second home owners to start thinking, asking, ‘What are we going to do? ‘” she said.
Even so, Thompson said some would choose not to buy in the county. When that happens, Thompson guessed those looking to buy in the county will have the luxury of taking their time and weighing their options – something that wasn’t always available to buyers during the hot market of the year. last.
In general, she said those with money to buy a home won’t be too affected by these increases.
“The reality is – and I always say this and it doesn’t sound right – but people who have money have money,” she said. “They did it during the recession of 2008, they still had it, they still bought it, they still paid tons of money to come here and ski, and then they went home. It’s hard to say when they’ll snap and say it’s not a good investment.