People have been asking me over the past week, what higher interest rates mean for Las Vegas real estate? The answer is complicated but in the short term, I view it as a good thing. How can higher interest rates possible be good? It is easy, the higher rates will send some home buyers to the side lines and this will bring multiple offers to a stop and the people that really want a home will still be able to get into one, just without the fight now. While they may pay a little more to own the home, current rates of 4.5% are still considered historically low. Even if rates go into the 5%-6% range, most people will still be able to get the home they want.
Now the down side to what higher interest rates mean for Las Vegas real estate. Sellers, will see home prices stabilize and the large increases over the past 6-8 months are already slowing. I do not see a housing bubble or a decrease in prices at all. I think the only way housing in Las Vegas would decrease in value in the near term is if interest rates shot over 7%.
The bottom line is inventory of homes on the market is increasing so the law of supply and demand are kicking is and prices are leveling off. Buyers will be able to buy and sellers will be able to sell. This will certainly be more of what is considered a "normal" market.
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