Here is a good recap by the Chief Economist at Freddie Mac about the impact of interest rates on home affordability. It is from back in June so his stat on increase is dated – rates spiked in July since the lows in the Spring, but have since pulled back a bit – track rates here.
The Key takeaways from this video for those who watch the market:
- Rates need to hit 7% before homes become un-affordable for median income buyers in most markets (I think 7% is overstated for the Denver Market due to average home price to median income ratios here).
- Rate increases will stimulate buyer activity as qualified buyers jump in to the market to take advantage of low rates before they increase (this echoes my observations in a previous blog post from the end of June) .