The Real Driver Of Home Sales-NOT Interest Rates

Performance Property Real Estate Question

Q: With mortgage rates so much higher now, are people going to stop buying houses? Jake, Springfield, NJ

A: Contrary to what you’ll often hear in the media, people generally buy and sell homes based on life events not based on macroeconomic factors like interest rates. Despite recent increases in mortgage interest rates, the homeownership rate in the US has risen to almost 66%, which exceeds the level of homeownership before the pandemic and the rate of homeownership among younger households, who are typically more likely to rent than own their primary residence has also increased over the past five years both for households under 35 years old and for households between 35 and 44 years old.

The media tends to focus on things that are easy to report and talk about like higher home mortgage rates. Nevertheless, life always happens regardless of macroeconomic factors and life events like a new job, a job loss, a marriage, a divorce, a new baby, an illness or a death play a much bigger role in the buying and selling decisions of homeowners than macroeconomic factors like interest rates. Thanks for your question, Jake.

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