The Impact of 7% Mortgage Rates on FishHawk Real Estate

By Jeffrey Gould

Posted March 9, 2023

The Impact of 7% Mortgage Rates on FishHawk Real Estate

Mortgage rates are now in the 7% range here are my thoughts on how that impacts the FishHawk real estate market.

Buyers

Buyers will see a decrease in affordability: With higher mortgage rates, homebuyers would have to pay more interest on their loans. This would decrease the amount of money they can borrow and increase their monthly mortgage payments, reducing the amount they can afford to pay for a home. As a result, some buyers will look to purchase lower-priced homes. On a $400,000 mortgage, the difference in monthly payment between a 4% mortgage and a 7% mortgage is about $750 a month!
Slower housing market: Higher mortgage rates may lead to a slower housing market as buyers may take more time to find the right home or may be more hesitant to buy. This usually would lead to an increase in the number of homes on the market and longer selling times. The increased inventory has not increased yet and has actually been reducing. I will look at that in more depth below.
Increase in rental demand: With lower affordability for homebuyers, some may choose to rent instead of buying a home. This could lead to an increase in demand for rental properties, which may increase rental prices. Rents over the last few years have increased a lot and can increase at any point the rental is not under a lease.

Sellers

The biggest impact on most sellers will be the decision to actually sell their home. Since we’ve just come from a historically low mortgage rate environment, a majority of sellers have mortgage rates under 4% with some having rates as low as 2.75%. Unless a seller really needs to sell or will be a cash buyer, most sellers are not going to sell right now and go from a 2.75% mortgage rate to a 7% mortgage rate on a new home.
Inventory levels for FishHawk homes for sale have been dropping recently so on one hand there is less competition for homes that are listed. On the other hand, there are fewer active buyers currently looking. Home prices have come down a little bit but do seem to be fairly stable. Overall, we do not see the demand that we saw in 2021 but homes in nice shape and not overpriced should sell in a timely manner.

The Overall Impact on the FishHawk Real Estate Market

Personally, I feel that the biggest impact on the FishHawk real estate market will be the lack of sellers willing to sell their homes because they do not want to go from a very low mortgage rate to a 7% mortgage rate. Inventory levels are painfully low. For all of Lithia, there are a total of 89 properties for sale! I feel that a mortgage rate of 6% or lower will increase real estate activity. Mortgage rates over 6% and especially over 7% will slow the real estate market. Personally, I am hoping for some good inflation news soon! If we start getting that, it will soften the 10-year Treasury Note that mortgage rates tend to follow.

Overall, a 7% mortgage rate does have a significant impact on the FishHawk real estate market, including decreasing affordability, slowing the housing market for multiple reasons, and increasing rental demand.

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About The Author

The above real estate article The Impact of 7% Mortgage Rates on FishHawk Real Estate was written and posted by Jeffrey Gould.

Jeff is a top-selling, nationally recognized REALTOR®, real estate Broker, and your local FishHawk Ranch real estate expert. You will find him selling homes in Tampa Bay, Florida, and surrounding areas. Some of those areas include FishHawk, Lithia, Riverview, Valrico, Apollo Beach, Brandon, and Tampa.

If you are looking to sell or buy a home anywhere in the Tampa Bay area, Jeff is your local and trusted professional.