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Rising interest rates constitutes both good news and bad news for both buyers and sellers in our market. Here’s why. Selling a home? Get a free home value reportBuying a home? Search all homes for saleHow are interest rates going to affect your ability to buy or sell?Let’s start with the buy side. Interest rates have gone up about a half a percentage point since the election, and we’re anticipating that they will continue to rise. By summer, we may see them increase a full percentage point or more, depending on what the Fed does and how the economy acts.How does that affect your ability to buy? A lender is going to look at your debt-to-income ratio and what percentage of that can go toward your mortgage. If rates go up anywhere from a half a percentage point to a full percentage point, that could raise your home payment on a $500,000 mortgage anywhere from $200 to $400 per month. When rates go up, your ability to purchase goes down. For sellers, this anticipated rise means you may face less competition. We’re in a unique situation here in Southern California in that both interest rates and inventory are historically low. You probably won’t get as many multiple offers, but you may get stronger offers.“Their true impact is something we can’t know until later on. ”Shifting back to the buyer’s standpoint, rising rates may also give you more negotiating power. Does that mean you can try a lowball offer? No—our inventory is still too low for that. Here in Orange County, our absorption rate is still around 60 days. In our desert market, the absorption rate is roughly a little over 100 days.The market is still moving at a relatively good pace, but the true impact of these rising interest rates is something we really can’t know until a few months down the road. As we are in the seasonal month here in the desert, inventory is up, but so is buyer demand. In Orange County, listings are always down in the winter months, and buyer demand is sometimes relatively equal to that. In summation, I don’t think interest rates will have an immediate effect on your ability to buy or sell. We’re still in a very strong market and consumer confidence is up. The only real question is whether the time is right for you.If we can help you answer that question, please feel free to give us a call. We look forward to the opportunity to serve you.