Are interest rates a real motivator for buyers in your market? If not, why?

Asked by Trulia, San Francisco, CA Wed Apr 10, 2013

Help the community by answering this question:

+ web reference
Web reference:

Answers

135
Alex Montelo…, Agent, Seal Beach, CA
Mon Jul 7, 2014
Yes I think that interest rate are a huge motivator. I feel that everyone gets concerned about rising interest rates. Rates will determine how much house a buyer can afford, based on their payments. Buyers will buy any home that they want as long as they can afford the payment. When the interest rates rise along with prices, the buyers expectations will go down. They will start looking for 3 bed 1 baths instead of 3 bed 2 bath homes for example.
5 votes
David Manning, Agent, Virginia Beach, VA
Fri Feb 7, 2014
I'm not sure if low interest rates really entices the buyer to buy but I can tell you in my 15 years experience I've sold more houses when the rate is going up then when its going down. It does seem more difficult today for the buyers to qualify and with the housing prices being lower then years past I have had a more difficult time getting my sellers to help the buyers purchase. I Service Virginia in the Hampton Roads area and so far this year the market has been slow. I am hoping for a Warm Springs and hotter market. I wish all my fellow Realtors a very successful 2014
3 votes
It kinda makes sense that people buy more when the rates are rising, they want to get in NOW, before the rates get any higher. On the other hand, when rates are dropping, they want to see how low they will go. It is similar to the stock market like that.
Flag Fri Jan 30, 2015
Interest go typically up when the economy and job market improve. That translates into a higher consumer confidence. Today affordability of the down payment and access to credit still remain the key issues.
Flag Wed Jul 2, 2014
Christopher…, Agent, New Cumberland, PA
Tue Feb 11, 2014
Interest rates have caused alot of my buyers to be more on the ball then when they are higher and stable. At the same time I have come accross buyers who think they will get even lower. I had a homeowner ask me if she should re-fi her 3.75 Fixed for an ARM. AMAZING
2 votes
Neil libin, Agent, San Diego, CA
Sun Apr 19, 2015
The buyers I have been dealing with lately have been thrilled with the low interest rates. I believe that the motivation is there but the inventory levels have hurt the ability of the buyers to purchase homes.
1 vote
Jean Pasvar, Agent, Dallas, TX
Tue Mar 31, 2015
Do low interest rates motivate buyers? I would say yes and no. When rates are low and are low for a long period of time buyers begin to get complacent and think those great rates will last forever. But, when rates start to go up by 1 point or so then they get off the coach and do something because they are afraid it will keep going up. The same seems to happen when rates drop by a noticeable amount
more buyers jump into the Market. I think what really motivates a Buyer is the sense of financial security and that the economy is stable. And I believe the news media can influence the public's sense of security.
1 vote
Sam Shueh, , San Jose, CA
Sun Jul 20, 2014
It used to be that way. % affordability will reduce the prospects. With interest rate at historically low, those who are ready already have purchased.

We are dealing now with new comers who do not wish to pay high rent. This is Silicon Valley
where interns will get paid $70-80K a year.

Keller Wms Realty
1 vote
Charlene Gre…, Agent, Boca Raton, FL
Sun Jul 20, 2014
Yes interest rates are a big consideration and motivating buyers to get out and buy their homes.
1 vote
yes but the Homes inventory is low and very high prices example 2b 1b Home
3500 lot 1car garage 499,000 for first time buyer try Eco Park
Flag Tue Sep 2, 2014
financing is one of the most important for any buyer point of view ,but the prices of Houses continue increasing and it is very hard to approve the loan
Flag Tue Sep 2, 2014
Leslie Thome…, , San Diego, CA
Mon Jul 7, 2014
In years past it did not for my buyers. If the rates went up by a .250 or .5 or even one percent, I rarely had a cancellation. In todays market I have seen buyers cancel when rates hiked up just a .5 percent.

Low rates and the right sales price equalling the exact payment a buyer is looking for will gurantee a closing in my opinion. Shoping for a payment is more important than the home for many Younger buyers today.

The move up market is the same.

The only place where I still see the Home and location being more important is with my borrowers buying 650K and above.

Have a great day. Let me know if I can help with anything.
1 vote
skammel, , Peabody, MA
Tue Jun 10, 2014
No it is not, rates should not drive the buyers one way or another, I always tell the buyer that the most important is the property they buy, meaning location, condition...etc. These things can not be changed by any mean, but the interest rate they can always refinance without any cost to them, that is what I would say to the buyers.
1 vote
Linda Randes, , Shalimar, FL
Fri Jun 6, 2014
My answer would be yes, at least in our local area. We are in an area with a high percentage of military and military-related contractors which also provides a very strong rental market. We have found that those who will be here a few years and who can qualify would rather buy because the interest rate truly provides that in most cases potential buyers can buy for less than they can rent and they don't feel like they are "settling". And in most cases, the properties will rent and cover their payment when they do move.
1 vote
Alistair Bar…, Agent, Fruitland Park, FL
Sat Mar 29, 2014
ALSO - bear in mind that home buying is emotional. If they can get the house of their dreams but it's a higher interest rate or monthly payment (assuming they can afford it), they'll go for it...!
1 vote
Elijah and M…, Agent, Laredo, TX
Tue Feb 11, 2014
I believe so. In my experience, clients have decided NOT to purchase because they did not find the rate they felt most comfortable with. Other times, less often than not, there will be a client or two who will for go the hiked-up interest rates and purchase anyway. All in all, I think it is a strong motivator when it comes to home buying.
1 vote
mary ann Lip…, Agent, Spring, TX
Tue Feb 11, 2014
well that question is kind of like asking, "do you buy more gas for your car when prices are up or down?" It doesn't matter, gas and a house or place to live people have to have.

But when interest rates are lower, they get more house for the money! Lower rates open the doors to more "first time home buyers" who couldn't buy if the rate was higher. It also allows current homeowners to sell and "move up" to a bigger or better home.
1 vote
I tend to agree with Mary Ann. It completely depends on the buyers' situation-- do they have to buy (whether perceived or real) due to a job change, kids becoming school age, change of life circumstances? If so, then I don't think interest rates matter that much so long as they don't increase wildly in a specific market. Alternately, if it is a move-up buyer or someone who has discretion to wait, they might choose to do so until the rates drop to a level they believe is the bottom.
Flag Sun Oct 26, 2014
if numbers do not talk loudly to buyers then nothing you can say will get them off that fence.
Flag Fri Feb 21, 2014
Charlotte Tu…, Agent, Williamsburg, VA
Tue Feb 11, 2014
Interest rates are a factor. I think the bigger factor is consumer confidence. If buyers feel like the economy is fairly stable or growing they are willing to make a move. Interest rates factor into the decision but, as others have mentioned on here, some pretty big housing booms have occurred during times of rising interest rates.
1 vote
Lynette Brow…, Agent, Bronx, NY
Sun Feb 9, 2014
Hi Trulia,

Yes, interest rate are a real motivator for buyers, but it is still hard to get buyers off the fence.
1 vote
mary ann Lip…, Agent, Spring, TX
Fri Feb 7, 2014
Of course, the lower the mortgage(interest) rates, the more house a buyer can afford and purchase!
But the overall economy is good in my area, Houston-Spring Texas, so real estate last year was great and the boom is continuing. This is the best time ever to buy a home!!
1 vote
Shirley Gins…, Agent, Harwich Port, MA
Wed Jan 22, 2014
Buyers are motivated by interest rates and should be. However, many feel that mortgages are difficult to get. On Cape Cod, using local banks, it is not difficult to get a home mortgage. There are many products that fit the buyer's needs. Please call me at 508-237-0050 and I can connect you with the right mortgage agent.

Shirley Butler Ginsberg, Kinlin Grover Real Estate
1 vote
The Roskelly…, Agent, Gambrills, MD
Thu Jan 16, 2014
Absolutely yes. Many of our clients come to us undecided on whether to rent or buy. With interest rates as low as they have been it is often more cost effective to buy and less money out of pocket for our Veteran buyers.
1 vote
Josh Barnett, Agent, Carney, OK
Sun Dec 8, 2013
Interest is the "rent" of money. If a nice home is going to cost more due to rates rising, the purchaser has to decide to act now or pay an extra 50 to 100 dollar a month later.

Flip side, rate could also decrease, but this is highly unlikely.
1 vote
Ina Felsher, Agent, Aventura, FL
Sat Dec 7, 2013
Certainly, for buyers in need of a residence choosing to finance with interest rates being so low.

Cash buyers, of course, are not affected.
1 vote
Rakesh Kumar, Agent, 20151, VA
Fri Nov 29, 2013
No, not much! This actually depends upon how a Real Estate Agent puts it. First time home buyers need to know that their predecessors paid more than 10% interest for their First Dream Home and also put down 20% minimum. Now, the buyers have so many choices and ways to manage down payments, negotiate for the interest rates and terms + re-newed and enhanced Regulatory Boards to protect consumers interests. If the buyers are still not ready to bite, I don't think any cheese will be left for an easy bite in future. We, the Realtors, should first educate and inform the consumesr and then the consumers should take an informed decision. This is the best time to buy and the best interest rates available....
1 vote
Laura Feghali, Agent, Stamford, CT
Fri Nov 29, 2013
Yes, it is the number one factor on why buyers are now purchasing and not waiting until later as they know that rates will never be this low again. Rates have already bottomed out and moving higher than they were a year ago. Lenders are tightening their guidelines making it tougher for some folks to qualify for a mortgage. 2014 should be an interesting year.

Laura Feghali
Berkshire Hathaway HomeServices New England Properties
1 vote
Kishore Sher…, , Sacramento, CA
Fri Jul 19, 2013
Interest rates makes mortgage amount lower plus can qualify for more offer price so yes
1 vote
Matt Mortens…, Agent, Las Vegas, NV
Fri Aug 14, 2015
In my experience the average consumer is unaware of current interest rates. So, their motivation can only be indirectly influenced by interest rates.
0 votes
Rekha Shah, Agent, Long Beach, CA
Tue Aug 11, 2015
Yes, Buying power for a Buyer is increased. Instead of 3 Bed/1Bath , they could be approved for 3 Bed/2 Bath.
0 votes
Jean McPhee, Home Buyer, Pensacola, FL
Tue Jun 2, 2015
Yes, they are a motivator but sales are being slowed down by the new federal regulations on lenders. After August few sales will close in less than sixty days and cash buyers will have even more of an advantage, In the guise of helping the consumer even real estate agents are being hamstrung by not being ab.e to use their experience in the market to recommend closing agents, etc. It is as if you can provide a list of names and ask an inexperienced buyer to choose or even better send them to the Yellow Pages! Jean McPhee, Pensacola FL 850-572-7112
0 votes
, ,
Thu May 21, 2015
it is actually the Main Concern
0 votes
Conrad Hodgs…, Landlord,
Thu May 14, 2015
The statistics does support the theory given that all charts indicate price increases when interest rates increase. Simple supply and demand economics. This supports the theory that rising interest rates gets prospective buyers off the fence, increasing demand.
0 votes
Jeffrey Hopk…, Agent, Bay Shore, NY
Mon Apr 20, 2015
The answer is yes and no. In much of my own experience as a Realtor, lower interest rates can be enough to motivate a buyer from looking to buying, whereas many buyers are motivated enough just knowing they can even qualify to purchase a home, whatever the interest rates may be. And then there's the buyer that will purchase a home if they find the home of their dreams, though they may not realize this is true until they actually live through the experience..
0 votes
Francine Cec…, Agent, Beverly, MA
Tue Apr 14, 2015
No. Buyers do not know or understand the effect of interest rate on monthly payments or the long term interest paid. Most Buyers are in the present, not long term future since most are not thinking of staying for 30 years. First time buyers especially are struggling to come up with the down payment & closing costs or huge college loan debt as a barrier to buying regardless of interest rates.
0 votes
Marsha Umans…, Agent, Tamarac, FL
Wed Mar 25, 2015
The interest rates drop by itself will not motivate someone to go shop for a house, but it can make buying a house affordable for some folks who were priced out before.
0 votes
Imma Carletto, Agent, White Plains, NY
Wed Mar 18, 2015
Absolutely! I've hosted two open houses in the past two weekends and the response has been enormous. I asked many of the buyers why they are ready to buy now and they all said they were afraid the interest rates were on the rise.
0 votes
Troy Erickson, Agent, Chandler, AZ
Wed Mar 11, 2015
Although I do feel that interest rates are something potential home buyers may look at, and it may help other home owners decide whether to move up to a larger home, I do not think it is that much of a motivator in the final decision whether someone chooses to buy or move. I think it works the other way around, people consider buying or moving due to a number of reasons, and then then look at interest rates and other factors to see if they can afford it, and that it makes sense. If they can afford it, they move ahead, whether rates are high or low, but if they can't afford it, they will decide not to move. Interest rates only play a factor based on affordability, not whether the rates are high or low. I guess what I am trying to say is I don't think people watch interest rates, then decide whether to buy a home or move based on what the interest rates are doing.

Interest rates are what they are at any given time, and there are certainly other factors that play a much larger role whether someone buys a home; things like a new job or job transfer, a pay raise, a marriage or divorce, a pregnancy, children growing up, or older children moving out of their home.

I personally have never had anyone looking to buy a home decide to change their mind and not buy because the interest rate went up last week. I also have never had any client call me and say, "Hey, interest rates are low, I think I want to buy a house today. After all, rates may be going up tomorrow."

I think agents use interest rates as a marketing ploy to try and sell homes. When interest rates are low, agents say "buy now" before interest rates go up. "Rates will never be lower". Then, when interest rates are high, agents still say "buy now" before rates get any higher. That is always the scare tactic they use.

I have never heard an agent say interest rates are high, nobody buy a home right now. Or how about, interest rates will be decreasing next year, why not wait to buy for another year or two.
0 votes
Carol FOX Be…, Agent, Lafayette, LA
Thu Feb 26, 2015
We will see a spike in residential sales as interest rates start to climb. It will motivate those buyers who are just thinking to act quickly to secure the current interest rate before the rates climb higher.
0 votes
Ana Landgrave, Agent, BELLFLOWER, CA
Thu Feb 19, 2015
Rents have raise dramatically! Buyers come to me asking for options. When we take the time to educate our buyers and explain the importance of interest rates and the impact they have on the mortgage payments they will understand their options and feel motivated to buy a property. With a low interest, buyers have the advantage of a low mortgage payment and also gives buyers the opportunity of paying off their house sooner instead of paying rent.
0 votes
Brenda Buehl…, Agent, Sheboygan, WI
Fri Feb 13, 2015
Although today's young buyer has no real idea of what interest rates could really be, they are being influenced by the continued strand of low rates. How many of our buyers remember the double digit interest rates? These are the people who see this as an opportunity to upgrade, upsize, or buy that second home. Motivated......how can we not be ?
0 votes
Mark Saunders, Agent, North East, MD
Thu Feb 5, 2015
Yes lower rates will have buyers thinking hard it could make the difference on what they can afford
0 votes
Alexandra Ro…, Agent, San Mateo, CA
Sun Feb 1, 2015
.interest rates are the key. Buyers get more home for their money. Lots of activities starting now. Statistics show that April to June is the best time to sell.
0 votes
Joanne V McC…, Agent, Bothell, WA
Sat Jan 31, 2015
I believe that interest rates are one of the many motivators that can affect a buyer when they are considering a home purchase. In my 25 years as a real estate broker I think the movement of an interest rate ticking upward as resulted in "motivating" a buyer who has been sitting on the fence and watching things to suddenly be motivated to start the home buying process. People are generally more motivated into action by fear of loss as compared to the recognition of the many benefits which they can receive from home ownership.
0 votes
Connie Schaf…, Agent, Lansdale, PA
Fri Jan 30, 2015
Yes, the low rates are definitely motivating buyers right now. We may never see these rates again. We need fresh listings though!
0 votes
Kamal Kumar, Agent, Metuchen, NJ
Thu Jan 29, 2015
Absolutely! What a buyer can buy and actually afford is so much more when the rates are low. The rates we have today (2014-2015) are ridiculous. If I would had these rates throughout my life, I would have been sitting on a beach someplace.

I do believe low rates motivate the knowledgeable buyer, not everyone.
0 votes
Mike Griffin, Agent, Hot Springs Village, AR
Wed Jan 28, 2015
I think buyers are struggling with money for down payments and strict lending requirements more than worried about the rate. With the reduced down payments and lenders loosening up some,buyers will pay a little higher rate,they're just happy to get the loan. I think interest rate is more of a motivator in the refinance market.
0 votes
Rekha Shah, Agent, Long Beach, CA
Sun Jan 25, 2015
Yes! It is a motivator. Purchasing power goes higher & Buyer can choose a little larger property.
0 votes
Karen Anders…, Agent, Yukon, OK
Wed Jan 14, 2015
Yes, interest rates play a big factor on the market. Buyers are no longer sitting on the fence as long as before. In todays market they are afraid of losing their dream home to another buyer. Homes are not staying on the market as long. They are selling faster! Although, lending is getting tougher out there, the interest rates are still at an all time low. So start working on repairing your credit and getting in on the low interest rates while they are available.
0 votes
Corrien Faso, Agent, Danville, CA
Thu Jan 8, 2015
Interest rates are absolutely a motivator for buyers. It can make the difference between getting a loan at a higher approved value, and getting the home the buyer wants and desires. With interest low, the lenders starting to loosen up with lending conditions, the FHA dropping to a 3% down versus a 3.5% down, and now the reduction in mortgage protection insurance definitely can make a huge difference in what the buyer can qualify for. -- Corrien Faso, Realtor, Alain Pinel Realtors, Walnut Creek, California
0 votes
Karen Feltman, Agent, Iowa City, IA
Wed Jan 7, 2015
In our local market, the rates have been hovering around the 4% mark for all of 2014. The interest rate is primarily a factor for first time buyers that are currently renting or for a buyer that wants to move up for the same payment on a larger home. Marketing those advantages to past buyers is the key, showing value to the lower interest rate to a current home owner. This does not happen on its own unless you are able to show it. I think that interest rates are just one piece of the puzzle for today's buyers. In our local market, buying makes sense because it is very expensive to rent.
0 votes
maryann arce…, Agent, miller place, NY
Sat Jan 3, 2015
yes!It gives the buyer more choices.The desirable homes that they could not qualify to purchase are now available to them .Investment properties will also make sence to rent out and make a profit each month.
0 votes
Ingrid Miles, Agent, Topsfield, MA
Tue Dec 2, 2014
Affordability is a function of many factors: income, interest rates and housing price mixes into the equation. As rates go up, there exists the possibility that affordability lessens. For every half point of interest rate climb, buyers lose 5% of purchase power. In other words, if Buyer was able to purchase property at $300K at rate of 4%, with an increase to 4.5%, the property price would max out at $285K. That's $15K less in terms of value availed to the consumer.

Buyers are quite savvy and are well aware of the implications of interest rates.
0 votes
gerri corrig…, Agent, Warwick, RI
Sun Nov 23, 2014
when interest rates are lower that the rate of appreciation, then YES it is a financial motivator
0 votes
Gail Feldman, Agent, San Diego, CA
Sun Nov 23, 2014
If interest rates are not a motivator - it is because the person doesn't understand why they should be.... or the person has cash !

Low Interest rates is a way to buy money for very little....
ULTIMATELY:
in how you use your home over time-0 kliving, renting, etc
YOU CAN
create wealth: cash flow...retirement
when your payments are low...

lets go!
0 votes
1 2 3
Search Advice
Search
Ask our community a question

Email me when…

Learn more