Peter Giovannotto

While most kids were spending their summers on baseball fields or in waterparks, Peter was touring properties with his father, learning how to estimate their value. Instead of children’s board games, Peter played real life Monopoly in his family’s business of buying and managing apartment buildings, condominiums and single-family homes. Real estate is clearly in Peter’s DNA, and his deep-rooted experience in the business gives him a marketing savvy beyond his years.

This is the topic that’s on everyone’s mind right now.

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Those rates, combined with the robust local economy, have sent buyer demand sky-high and housing prices soaring. The spring market was a frenzy of multiple offers, often far over listing prices.

Then at the end of June, the market threw us a curveball. The average 30-year fixed mortgage rate jumped from 3.93% to 4.46%the largest weekly increase since April 1987.  While rates are still historically low, this surge was a jolt for buyers sweating the spreadsheets trying to decide exactly how much house they can afford. The rise in rates will change the equation for some homebuyers.

For buyers who are stretching their budgets, rate changes can have a big impact. I predict that the $1.8-$2.5 million market will be the hardest hit because these buyers tend to be doing the most leveraging. Below that the effects on the monthly payments are not as great, and above that buyers are coming into the deal with more cash and are less dependent on loans.

So what does this all mean?

The basic economics are that as interest rates rise, buying power decreases and the buyer pool for houses decreases as home prices increase. In our hyper-local market with so many cash and international buyers, it remains to be seen if small increases in interest rates will have a substantial effect. Still, in this volatile market, there are likely to be fewer multiple offers on properties and more loan contingencies.

Advice to Sellers: If you’ve been on the fence about putting your house on the market, do it now, while interest rates are still low. If interest rates continue to rise, it will negatively affect the marketability and price of your house. Also, when you put your house on the market make sure that it is well prepared and makes a great first impression. You might not get a second chance.