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Will Higher Interest Rates Slow the Market…Not Yet!

Will Higher Interest Rates Slow the Market…Not Yet!

April 25, 2022 4:19 pm

We have all been amazed by this incredibly hot real estate market. Dwindling inventory, multiple offers on homes, and record appreciation, are all contributors to our inflationary market. With no end in sight, Federal Reserve Chairman Jerome Powell is hoping to slow both inflation and the economy by raising interest rates. This process began in February and to date, the increase in rates from 3.5% to nearly 5.5% has had no immediate impact on slowing down the hot housing market.  

From ELEETE’s micro market view, we have been seeing on average 5 offers on every new listing we bring to the market and that average has remained consistent despite the dramatic rate increase in the first quarter. As you can see by the chart below, in January, when interest rates were 3.25%, our average listing was selling for 5% over the listing price. In February, rates increased to 4%, and the result led us to selling our average listing for 7.7% over the listing price. The trend continued in March with rates going up to 5% and our average home selling for 9.5% above the asking price. And now, here we are at 5.25% interest rates and to date, this month, our accepted offers are now averaging 14% over the listing price.  

 

Why is this still happening? It is all about supply or lack thereof. The demand from the buying public is still strong, there are fewer new construction starts due to lack of available land, and we continue to have supply chain issues for the homes that are being built. Then, when it comes to re-sale homes, most existing homeowners who are also buyers, now have access to cash to secure their next home, without listing or selling their existing homes, via “same as cash” financing or through personal wealth private financing vehicles. Essentially, homeowners are sitting on their respective homes, waiting for the ideal home to hit the market.  

This lack of fluidity in the market was never an issue prior to 2004, because homeowners were able to list their home for sale, get it under contract and secure their next home via a home sale contingency. One thing for certain, something will change, but how and when it changes, no one seems to know. Perhaps we just need a few more months of these higher rates and we will begin to see a shift. Time will tell.  

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“

I highly recommend Eleete Real Estate. I have done two transactions with Lee and his team and the experience was outstanding. The team has great knowledge of the area, but most important, they really listen to your needs and concerns. Everything was handled with the utmost professionalism, zero pressure and response was immediate to our requests. Whether you are buying or selling a home, Eleete Real Estate is the best choice for the NW Portland area, no question.

Benjamin T. - Portland, OR

“

We enjoyed working with Lee and his staff. We listed the house in December, in a tough market. The house was priced correctly, the marketing was done professionally and the house sold within weeks. We had a closed transaction in January. We were pleased with the sales price and the efficiency of the process. The staff at Eleete were friendly, communicative and very professional. Thank you again Lee for a positive experience.

Bill T. - Beaverton, OR

“

The team at Eleete have helped me on several transactions…both personal and business related (I’m a local builder/developer). You won’t find a more professional and knowledgeable staff that will work tirelessly for you and your best interests.

Eric T. - Portland, OR

Contact Us

Portland

9200 SW Barnes Rd.
Portland, OR 97225

Lake Oswego

148 B Avenue, Suite 100
Lake Oswego, OR 97034

Phone

503-292-1500

Email

info@eleetere.com

 

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