Real Estate Bits and Pieces

Blog by Susan Pruden

Cheverly, Maryland

Informal observations about Prince George's County Real Estate and happenings around our local area. I'm Susan Pruden, in Cheverly Maryland and I welcome your comments and participation.

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Rising Interest Rates Mean Smaller Pool of Buyers

Posted at Real Estate Bits and Pieces by Susan Pruden

Saturday, June 28, 2008

Categorized in: Pricing and Value

Tagged with: buying power, interest rates, selling power

The Washington Post reported yesterday that mortgage interest rates are at a 9-month high. Recently I wrote about the fact that every time rates rise, buyers qualify for less house. In other words, they lose buying power.

But what about the impact of rising interest rates on sellers chances of selling?

The 2004 Census has the median income in Prince George’s County at $55,129. At 6% (and assuming a plain vanilla 30-year fixed rate loan with 20% down), the seller of a $350,000 house needs to find a buyer who makes just shy of $89,400 per year. At 6.5%, that same seller is now in search of a buyer with an annual income of $93,300.

My point is, in a buyer’s market with rising interest rates, sellers can’t afford to play around. It becomes even more crucial to price the property to sell quickly. Every tick upward in interest rates means a smaller pool of qualified buyers.

It is pretty much a no-brainer to realize that the smaller the pool of potential buyers, the harder it is to sell your home.

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User Comments

1. RE: Rising Interest Rates Mean Smaller Pool of Buyers

Written by: Kim

Thursday, July 3, 2008

Plus if you add the mortgage companies/banks being very tough (dealing with credit scores and tighten of mortgage loans), it is a tough time to buy or sell your home....

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