Can Homeowners Afford a Slowdown?

It’s all anyone can talk about: mortgage interest rates. What are they doing? Where are they going? Did they really just touch a 20-year high? It’s true- they did. Albeit briefly, 30-year mortgage rates hit the highest they’ve been in a generation though not as high as they were historically in the 1980s. They’re still more than double what they were this time last year. 

So what does that mean for people who already own their homes? We know it’s tough out there for the homebuyer but if you’ve already bit off on the real estate market… are we losing money?

According to the experts at Realtor.com, not really. Sure, mortgage interest rates have ballooned a bit over the summer but it’s nothing to the extreme price inflation the housing market saw these past three years. Some markets saw a 45% surge in prices during the pandemic. Others, like Phoenix and Tampa, saw numbers more like 70%. What does that mean for the homeowner? 

Equity.  

Al Otero, portfolio manager for HAUS, Armada ETF Advisors explains his viewpoint on the current market. The way he puts it, “robust employment backdrop and the huge equity cushion homeowners have been sitting on after two years of enormous price gains will give the housing market a lot of wiggle room, even if we get pushed into a recession,” Otero said. 

That’s why we don’t need to fear having “a little bit of air” let out of the balloon. With so much equity in our homes now, a raise in mortgage rates doesn’t necessarily spell disaster.