3 Benefits of Buying a Home When Interest Rates are High

1. Decrease in competition and prices

One huge benefit of buying a home while interest rates are high is the cost of homes. During this low-interest environment over the past couple of years, too many buyers were competing for a historically low inventory of homes for sale. Offers over asking were practically the norm, and supply and demand were out of control. Although, rising interest rates are helping stop the issue. Higher interest rates reduce the number of buyers who qualify for a mortgage loan, which reduces the competition for homes. Meaning, buying while interest rates are high can lead to a lower price.

2. More homes to choose from

Another benefit to buying while interest rates are high is inventory. While rising interest rates continue to eliminate potential buyers who can’t afford the higher monthly payments, more inventory is coming on the market. Homes are still selling relatively quickly compared to pre-pandemic, but ultimately the housing market is still seeing homes stay on the market longer in general. With additional listings staying on the market longer; current listings and inventory is increasing. And that’s a good thing for buyers. With interest rates being as high as they are now, buyers have more choices.

3. Lower Risk

Lastly, interest rates being high lead to less risk when buying a home. Over the past two years of buyers competing over a limited supply of homes, many buyers were waiving offer contingencies. This is because offers with fewer contingencies lead to a better chance of being chosen by the seller. However, the inspection and appraisal were among the contingencies that were being waived. With the market balancing out, inspection and appraisal contingencies are re-emerging. In a normal market, the buyer requires an opportunity to inspect the home. If something comes up on the inspection they don’t like, they can back out of the contract. While the results of an inspection are not normally an opportunity for renegotiation of the offer price, it can serve that purpose if conditions that would require substantial investment are found. On the other side of things, you have the appraisal. When securing a mortgage, the lender will often require a value assessment by an appraiser. As a result, buyers with additional cash will pay the difference between the offer price and appraised price. Between the inspection and appraisal, high-interest rates lead to a less risky time to buy.

If you need help determining if buying now while rates are higher is beneficial to you, we would love to help. Reach us at (512) 308-3244 or [email protected]