We see the price changes. We see the pending sales fall out escrow. Buyer remorse could hit during the transaction or after. It’s no surprise. Buyers have to pay more for a loan, almost 70% more from a few years ago. Supply is still low but buyers are feeling the cost of purchasing rising, so contenders are falling out of the race and sheltering in the rental space.

I kept telling my clients that the older 3% interest rate on the 30 year fixed product was a steal. Loans being made at 3% is basically free money. If you have that rate, you should congratulate yourself.

Cash position buyers are unaffected by interest rate hikes but they could have better bargaining positions when submitting to sellers.

Buyers need to look at the numbers and see what their monthly liabilities with the new interest rate. Once that number is obtained, it can be contrasted against their current living expenses. They needn’t forget that the home purchase is also an investment that appreciates and they may have a return on that as well. In addition to looking at the numbers, ask yourself how long you intend to occupy the property. Mortgage loan originators are essential here to provide this information to you.

Imagine yourself looking at properties that have spent 30 days on market and have went through 1 or 2 price changes. What should you do? Look at the comparable sales and see what the competition is for this house and determine if any other houses are substitutes to this house. If you feel the house will not go pending by anyone else, calculate a trend of the price decline in your specific neighborhood and discount the property based on that trend. A realtor can assist you with this.

So looking at the numbers plays a large role in how you will proceed. While interest rates are up, don’t be discouraged. You will get a price discount that will help you out. If you own already and want to purchase a larger home, ask the MLO what it will take to rent out the existing property and buy the next property. It could be the start of your own real estate portfolio if you consider it carefully.