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  • Writer's pictureSang Han

Do high interest rates reduce the number of buyers?

There are people who hesitate to buy a house, saying, "When the interest rate rises and buyers leave, the house price will plummet, and then I will buy a house.”

Over the past year or so, the Fed has raised the interest rates 10 times. Has the number of buyers changed?

Yes, the number has declined.

The showing traffic index below is an indicator that states how much buyer demand has changed.

As you can see, it's down from last year's spring market. But it's a situation that has increased quite a lot in January and February this year.

So now the only thing left is for the real estate market to crash?

Well, that's not the case. The current demand is still higher than before the pandemic. If you look at the graph below, the figures for February are still much higher than before Covid-19.

On the other hand, supply is still very low. Therefore, house prices are rising rapidly these days. If you’ve already been looking for a home on the market, you would be familiar with that.

There is no definite answer about what the market will look like in the future, but it is undeniable that millennials, who have the highest population among existing generations, are influxing in as new buyers. If you are planning to buy or sell a house this summer, I recommend that you pay close attention to how the supply of housing will increase in the future and how the demand will develop before deciding the buying and selling time.

See you next time with helpful articles.

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