Interest rates are high! Isn't that what everyone says? Interest rates are high. Sure, I suppose, but wait, high compared to what? Well, to what they were a few years ago. Ah, yes, relatively speaking, that is correct. Interest rates are higher than they were just a few short years ago. Ergo, because of the "high" interest rates, many people are sitting on the housing sidelines, waiting for the rates to come back down before considering getting into the market.
So, interest rate watchers, let me ask you this: What will the rate be in a month? A year? Five years? Or even ten years? Truth is, no one really knows what the rate will be in the future. They just know that they are high now compared to what they were and what we all became accustomed to.
So I asked an AI: How do interest rates impact the housing market?
Here's what it produced:
"Interest rates have a significant impact on the real estate market in several ways:
Overall, interest rates play a crucial role in shaping the dynamics of the real estate market, affecting supply and demand, investor behavior, and market sentiment."
You'll notice in those five or six paragraphs that no number is given to designate high or low. It is all relative to one's perspective, much like paying your fair share. What is that? What is fair? What is high? What is low? What is normal?
At the time of this writing, the current interest rate is just under 7%. Granted, that is much higher than just three short years ago. But, comparatively speaking, we are lower than the median of 7.4% since 1970. In f t, from 1970 to 2001, the interest rate spent 99% of its time at or above the median and spent a significant amount of time in the double digits, peaking at about 18.5% in 1981. In October of 1993, the rate was about what it is today. But for those that had lived through the 18% and years upon years of double-digit rates, do you think they thought of it as high when the rate hit 6.84%? Of course not. It was all relative to their experience.
So to Act or Not to Act? That is the question. Well, only you can answer that question. But before you do, you should now understand that rates are about the average of where they have been over the past 55 years. And no one can predict with 100% certainty where they are going or will be at any time in the future. What say you?
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