“Lions and tigers, and bears, oh my!
Dorothy in Wizard of Oz
As Bruce and I step into the “Home Buyer’s Seat” in a quest to find our next home, I am feeling all the feels…excitement, anticipation, overwhelm and at times fear. It seems like the whole world is shouting from the rooftops about rising interest rates, critically low inventory and skyrocketing prices. As a veteran of this industry, you would think this would be old news.
Remember that scene from Wizard of Oz, when Dorothy, Tin Woodman and Scarecrow walk through the dark forest and their imaginations go wild assuming the noises are dangerous creatures? Then Cowardly Lion roars out terrifying them until Dorothy puts him in his place and he crumbles in tears?
I Decided to Tap into My Inner Dorothy and Confront this Lion.
Compared to 1 month ago, what does a rising interest rate actually mean in dollars and cents, if I purchased a Portland Average Sales Price Home at $582,200 with a 20% down payment?
Last Month at 4.25% Interest Rate
Principal and Interest Payment ~ $2290.47/Month
Today at 4.99% Interest Rate
Principal and Interest Payment ~ $2496.60
Difference~$206.13/Month or $2,473.56/Year
For the average Portland homebuyer, these numbers will probably not inhibit them from buying a home. I can eat out less or make my cappuccino at home and save $2,473.56 a year to make up the difference. Unfortunately, those who will be most affected by rising interest rates are those who were on the fringe of being able to buy and lower interest rates were making purchasing home within reach. My intent is not to oversimplify this scenario because we are all affected by it, but to demystify it.
Imagination is a powerful tool. When used against us, it can be quite the weapon.
When fear rears its ugly head again in the middle of the night, I can remember that I am not being chased by a saber-toothed tiger but witnessing an economy in flux. I will listen to the advice that I offer my clients.
Listen to the News, Your Friends and Loved Ones as Little as Possible
Take Time for Yourself
Trust in the Process
Stay Educated and Realistic