Post Content

Ask McEnearney: How have the interest rate hikes affected buyers?

This week’s Q&A column is sponsored and written by Hope Peele of The Peele Group and McEnearney Associates Realtors®, the leading real estate firm in Alexandria. To learn more about this article and relevant Alexandria market news, contact The Peele Group at 703-244-6115 or email [email protected]. You may also submit your questions to McEnearney Associates via email for response in future columns.

Question: How have the interest rate hikes affected the real estate market for buyers?

Answer: Seeing mortgage interest rates climb over the last few months has been scary for both buyers and sellers. Many buyers are wondering if they can still afford to buy, and many sellers are wondering if they missed their opportunity to sell at a great price. What I am seeing is a much more balanced market, which can be good for both buyers and sellers.

It has been very disappointing for buyers to see the interest rates climb. Many buyers are concerned about their ability to buy a new home with these increases. As 2022 has progressed, the super-competitive housing market began to slow down a bit in April with each new rate hike. By early summer, the rates hit 6% and many buyers took a break to figure things out.

Now we are seeing some of those buyers rethink things, and as they head back into the market they are finding a much more balanced environment. Of course, if you are wanting a home in a really hot neighborhood, it may still be super competitive. However, in general, it just got a lot easier for buyers. Yes, your monthly mortgage will be higher, but there are some great things about this market.

Since the pool of buyers has shrunk somewhat, there will be less competition for many homes. While the interest rates are higher, both the cash required at settlement and the risks involved in purchasing have gone down.

During the past two years there were often multiple offers, sometimes even 15-20 buyers competing for the same home. Buyers were not only having to make offers well above the list price, but they were waiving home inspection, appraisal and financing contingencies. This was a super stressful process for most buyers, who were accepting most or all the risk in the purchase, and oftentimes not getting the home they wanted.

When they did get the home, they had to be ready and able to put down substantial amounts of extra cash in case they had to cover a low appraisal. They also had to have extra cash in case of potential problems with the home, since they often had to waive home inspections and budget to fix things themselves.

To give you some perspective, a home in Alexandria was listed for $695,000 in early 2022 and sold for $758,000. That buyer probably had to come up with an extra $63,000 on top of their 10% or 20% down payment to get to closing. Or they may have had to reduce their downpayment to roll the shortage into the mortgage, increasing their monthly payment. In the current market, it very well may go for exactly list price, saving the buyer from coming up with that extra cash at closing.

Homes right now are staying on the market a little bit longer, giving buyers more time to make an informed decision. Because of this, and the decreased likelihood of competitive situations, buyers have a much better chance of paying list price, or less. Buyers can also usually ask for a home inspection now, and perhaps even negotiate some fixes. In addition to the inspection contingency, buyers can often ask for an appraisal contingency, so that if the home appraises lower than the contract price, they can negotiate a price adjustment.

All these options and contingencies are great for buyers and have been much less available in the market over the last year or two. But things are always changing!

If you are trying to figure out whether this is a good time for you to buy a home, the best place to start is to find a great lender and go through your options with them. I have several lenders that I work with who will take the extra time to be sure you understand the many scenarios available to you.

Once you know your loan options, it’s time to get started shopping. Meet with your Realtor to discuss your goals, to understand what your buying power is, and start narrowing down your search. I’d love to help, so don’t hesitate to reach out!

Hope Peele is a licensed real estate agent with McEnearney Associates, Inc. in Alexandria, Virginia. She grew up in Old Town and currently lives in Del Ray. As a partner with The Peele Group, Hope is dedicated to guiding her clients successfully through the many faceted process of buying or selling a home. Contact Hope at 703-244-6115.

If you would like a question answered in our weekly column or to set up an appointment with one of our Associates, please email: [email protected] or call 703-549-9292.

McEnearney Associates Realtors®, 109 S. Pitt Street, Alexandria, VA 22314. Equal Housing Opportunity. #WeAreAlexandria

Recent Stories

Ting Internet started providing some long-awaited competition to Comcast in parts of Alexandria earlier this year, now the company says it’s expanding to central Alexandria soon. Catharine Rice, community engagement…

Alexandria Police Department Captain Courtney Ballantine just spent 10 weeks at the FBI National Academy, and spoke with ALXnow about his experience. Over the summer, Ballantine lived in a dorm…

Arlington calls for aid, and Alexandria will answer. Alexandria’s City Council is scheduled to vote at a meeting on Tuesday, Sept. 26, to support neighboring Arlington’s funding application for an…

Dylan, the best-selling luxury condominiums in the Metro Washington area is now delivering, with three beautiful new models to tour. You’re invited to a Grand Opening Event at Dylan on…

Are you ready for a family frolic in front of the lens? Look no further! Our Mini Photo Sessions are here, and they’re filled with laughter, wagging tails, and unforgettable moments.

What to Expect:

• Professional Portraits: Bring your furry friends or the whole family for a portrait experience like no other. We promise to capture the most charming moments!

Read More

Submit your own Community Post here.

This week, we are thrilled to welcome Jane Lowery to our women’s therapy practice. Jane specializes in grief+loss therapy and she’s forming a support group for young adults who have lost a parent.

Grief work is personal for Jane. She’s a host with The Dinner Party, a national non-profit reducing the isolation & stigma for grieving 20 & 30-something’s with live and virtual sit-down dinners.

Jane is a graduate of Northwestern University’s Masters in Clinical Mental Health Counseling program. Prior to becoming a therapist, she worked for over 10 years in technology philanthropy. Jane obtained her bachelor’s in American Studies from George Washington University.

Read More

Submit your own Community Post here.

Made in Alexandria Fall Makers’ Market

The Made in ALX Fall Makers’ Market at Port City Brewing Co. in Alexandria is set for Sunday, Sept. 24!

This is the fall’s most fun sip-and-shop, featuring craft beer from the award-winning Port City Brewing Co. along with food,

2023 Alexandria Fall Festival

Food trucks, bounce houses, pony rides, magic shows and more at the 2023 Alexandria Fall Festival, an Alexandria Living event presented by The Patterson Group. Join us at River Farm on Sunday, Nov. 5 from 11 a.m. – 4 p.m.


Subscribe to our mailing list