I posted this about a month ago, but just had a presentation to a Seller yesterday and pulled this up as an example.

Because they are so low, interest rates have a greater impact on affordability than either appreciation or depreciation factors at this point. Every 1% change in interest rate impacts affordability by 11%. Here is an illustration to consider.

At 3.75% (30 year fixed) the principal and interest portion of a $200,000 is $926.23

If the rate goes to 4.75% you can only borrow $178,000 for a principal and interest payment of $928.53

If the rate goes to 5.75% you can only borrow $159,000 for a principal and interest payment of $927.88

These numbers are incredibly enlightening! Consider that as a Seller, you bought into our local market in 2007-2008 (at our peak) and purchased a home for $159k and have not refinanced. You are considering listing your home and buying and buying a larger home, but the value for your current house is below what you are expecting, say $135k, so you will be taking a loss. Should you stay, or should you go?

Considering you will be re-buying into the same value-depressed market, for the same payment you can now afford to buy a $200k home (which 4-5 years ago sold for $240k) compared to 4-5 years ago!

Same payment, larger (possibly newer) step-up home. Did you lose or gain?

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