Many Greenwich homeowners will be planning to list their properties this spring because it’s when future home sales would be expected to peak. Historically, spring is when the highest crush of prospects arrive on the scene. But this year, the upward drift in mortgage interest rates might have would-be sellers worried. After all, it’s common sense that any rise in home loan rates would put a damper on buyers’ enthusiasm.
Sometimes common sense and reality don’t go hand in hand. When we try to estimate the strength of Greenwich’s future home sales, it could be a case in point. That’s one way to look at the conclusions drawn by a pair of studies released last week. Both were focused on examining how rising interest rates are likely to affect future home sales.
John Burns Real Estate Consulting examined the “common sense” idea about the dampening effect of rising mortgage interest rates—and found historical evidence that put the kibosh on it. They looked at ten separate periods since 1975 during which rates rose by 1% or more, and found little or no impact on sales if the underlying economy was strong. Apparently, the public optimism that accompanies a roaring economy offsets the effect of higher monthly mortgage payments.
Another study by market research journalist Greg McCarriston summarized a late-2017 Redfin-commissioned survey. More than 4,000 people were polled in late 2017 about their own homebuying plans. Surprisingly, only 6% of those quizzed said they would cancel their own homebuying plans if mortgage rates passed 5%. A surprising 46% said that would either have no effect on their plans—or that it would actually increase their urgency to buy since rates might rise further.
Common sense or not, if both studies prove out, the strength of recent economic news could energize this spring’s Greenwich future home sales activity—despite a creeping rise in interest rates. That will be good news for homeowners who decide to sell, and for buyers. The selection of properties in Greenwich is excellent and none more special than the one featured in today’s blog and available for purchase.
Robin Kencel, Associate Broker
The Robin Kencel Group
Top 10 Greenwich Real Estate Agent, 2017
Top Agent, Douglas Elliman Greenwich