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Rising Interest Rates: How They’re Impacting Home Prices in Your City

Rising Interest Rates and Their Impact on Home Prices

Homeownership is the dream of many Americans, but with the increase in interest rates, the dream seems far-fetched for some. The Covid-19 pandemic has resulted in unprecedented levels of interest rates, which have impacted the housing market in several ways.

For most people, a home is the most significant purchase they’ll ever make; therefore, it’s essential to keep an eye on the market and understand the trends. In this article, we’ll explore the impact of rising interest rates on home prices and identify cities where home prices may increase rapidly.

Delaying Home Buying Due to High-Interest Rates

One of the negative effects of high-interest rates is that people put off buying a home. When interest rates are high, monthly payments increase, making it difficult for people to afford homes.

Thus, potential homebuyers are forced to pay more for the same home compared to what they would pay if the interest rates were lower.

Affordable Cities That May Become Expensive by 2025

The impact of rising interest rates on home prices is not the same in all areas. Some cities have been less affected than others, while some cities have seen massive price hikes.

Affordable cities, in particular, can be hit hard when interest rates rise. Cities that were once affordable may become expensive in a matter of years.

According to Zillow’s Home Value Index, some cities that may become unaffordable by 2025 include:

1. Boise, ID

2.

Austin, TX

3. Las Vegas, NV

4.

Nashville, TN

5. Tampa, FL

Cities Projected to Exceed National Average Home Values by 2025

While some cities may become even more expensive with rising interest rates, certain cities are expected to exceed national average home values by 2025. These cities have been seeing significant growth in recent years, and with interest rates on the rise, that growth is unlikely to slow down.

According to Zillow’s Home Value Index, some of the cities that are projected to exceed the national average home value by 2025 include:

1. Riverside, CA

2.

Phoenix, AZ

3. Orlando, FL

4.

Salt Lake City, UT

5. San Antonio, TX

Cities Likely to Become Unaffordable by 2024

A city can be an attractive option for homebuyers when prices are affordable, but things can change quickly. The same city that was once affordable can become unaffordable in just a few years, especially when interest rates are high.

Cities that are likely to become unaffordable by 2024, according to a study done by ATTOM Data Solutions, include:

1. Denver, CO

2.

Miami, FL

3. Dallas, TX

4.

Houston, TX

5. Portland, OR

Conclusion

Rising interest rates can have a huge impact on home prices, making it difficult for people to achieve their homeownership dream. Although interest rates can be beyond the control of homebuyers, it’s advisable to keep an eye on trends and be aware of how they can impact the market.

When interest rates rise, it doesn’t mean that all cities will experience the same effects; some may see a price decline, while some may experience a price hike. In this article, we’ve identified the cities that are projected to exceed the national average home values, and those that are likely to become unaffordable, as well as affordable cities that could become expensive by 2025.

Specific Cities and Their Projected Home Values

Over the past few years, we have seen a steady increase in housing prices across the country. While interest rates have some effect on these prices, other factors such as supply and demand, local economies, and geographic location also play a role.

In this article, we’ll take a closer look at specific cities and their projected home values.

Cities Projected to Exceed National Average Home Values by Spring 2024

Mountain Home, Idaho: This city has a current median home value of $168,117, and it’s expected to increase by 31.3% by spring 2024. Mountain Home is an affordable place to live, and with the projected increase in value, it’s an excellent opportunity for homebuyers.

Ontario, Oregon: With a current median home value of $180,012, Ontario, Oregon, is projected to increase by 31.4% by spring 2024. Ontario is a small town with great potential for growth, making it an excellent option for potential homebuyers.

Pittsfield, Massachusetts: This city boasts a rich cultural history and is home to a burgeoning arts scene. With a current median home value of $157,012, Pittsfield is expected to increase in value by 34% by spring 2024, making it a great investment opportunity for homebuyers.

Cities with Projected Home Values Exceeding National Average After 2024

Atlantic City, New Jersey: With a current median home value of $147,040, Atlantic City is expected to increase in value by 19.9% after 2024. The city’s real estate market has improved significantly in recent years, with new developments and an increase in tourism.

Daphne, Alabama: Daphne is a charming coastal town with a current median home value of $234,067. It’s projected to increase in value by 21.8% after 2024, making it an excellent option for those who want to live by the beach.

Fort Morgan, Colorado: This city, located at the foot of the Rocky Mountains, has a current median home value of $248,064 and is projected to increase in value by 21.9% after 2024. Fort Morgan is an up-and-coming city with excellent potential for growth.

Pahrump, Nevada: A short drive from Las Vegas, Pahrump is a city that offers a small-town feel with easy access to big-city amenities. With a current median home value of $187,095, it’s projected to increase in value by 23.6% after 2024.

Pocatello, Idaho: Pocatello is a beautiful city surrounded by mountains, with a current median home value of $173,141. It’s expected to increase in value by 32.2% after 2024, making it an increasingly popular option for homebuyers.

Panama City, Florida: Located on Florida’s Gulf Coast, Panama City is an excellent option for those who love the beach and water sports. With a current median home value of $177,220, it’s projected to increase in value by 18.6% after 2024.

Rapid City, South Dakota: This city offers a unique mix of outdoor adventure and urban amenities. With a current median home value of $224,457, it’s expected to increase in value by 22.1% after 2024.

Yakima, Washington: Yakima is a city known for its outdoor recreation and wineries, with a current median home value of $201,731. It’s projected to increase in value by 22.8% after 2024, making it a great option for outdoor enthusiasts.

Financial Advice for Potential Home Buyers

Buying a home is a significant investment, and it’s essential to make the right financial decisions to ensure that investment pays off. Here are some financial tips to help potential homebuyers:

Refinancing as an Option When Interest Rates Drop

One way to reduce mortgage payments is to refinance when interest rates drop. Refinancing can lower your monthly mortgage payment and potentially save you thousands of dollars over the life of the loan.

It’s important to do some research and compare rates from different lenders before refinancing.

Importance of Acting Quickly to Secure Affordable Home Prices

Another important financial tip for potential homebuyers is to act quickly to secure affordable home prices. The real estate market is highly competitive, and affordable homes can be snatched up quickly.

Homebuyers who act fast and make an offer on an affordable home may be more likely to secure that home and avoid paying more later.

Final Thoughts

When buying a home, it’s crucial to understand the local housing market and project future values. Specific cities across the country offer unique opportunities for homebuyers, with projected home values that vary significantly.

By understanding the trends and taking advantage of the available financial options, potential homebuyers can make informed decisions that lead to a successful purchase. In summary, the housing market is affected by various factors such as interest rates, supply and demand, and local economies.

This article highlighted specific cities and their projected home values, as well as financial tips for potential homebuyers, including refinancing and acting quickly to secure affordable prices. It’s essential to keep an eye on the market and trends, understand local housing markets, and consider available financial opportunities to ensure informed decisions that lead to successful homeownership.

By taking action and making informed decisions, potential home buyers can secure their dream home and investment while avoiding paying more in the future.

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