Shifting Expectations and Mortgage Rates

Mortgage interest rates are causing the market to shift.

Looking at interest rates through this lens:*

$650K price.
20% down
Principal + Interest payment= $2,263

Change that interest rate to 6% -> $3,118

And 5.5% -> $2,953

For a $500K at 5.5% house, P&I = $2,271

Buyers are going to necessarily pull back.

Sellers need to be mindful of buyers’ more limited budgets and set expectations appropriately. And listen to the best professional guidance they have. (here’s where I ask you to contact me with questions)

* I like Karl’s Mortgage Calculator; it’s a great iOS app too.

* note:these numbers are for just Principal and Interest; a full mortgage payment is comprised of Principal + Interest + (property) Taxes + (homeowners’) Insurance. Hence the commonly-referenced “PITI payment.” If you’re in a HOA, factor those fees in as well.

Everything is shifting.

Based on April CPI Data

Price increases in last year:

gas: +44%
airline tickets: +33%
used cars: +23%
hotels: +23%
suits: +22%
bacon: +18%
oranges: +17%
tires: +16%
furniture: +15%
milk: +15%
coffee: +14%
deliveries: +14%
bread: +14%
baby food: +13%
soup: +13%
cereal: +12%
eggs: +10%
dry cleaning: +10%

There’s a lot more I’m thinking about but not writing with this post.

A few of those thoughts

  • What will buyers do with inflation and interest rates?
  • What will happen to home prices?
    • In Albemarle so far this year, average sold home price is $641,228 and the median is $489,300
    • City of Charlottesville: Average is $525,075 and median is $455,000
    • Nelson County: $448,659 and $400,000
    • Fluvanna: $361,932 and $335,000
    • Greene County: $366,837 and $340,000
  • What about the homeowners who are locked at 3%? Will they ever sell, even if they and their lives want/need to?
  • Sellers who’ve witnessed neighbors and friends cashing in – will they accept this new reality?
  • When will this new market reality sink in?
  • What about the market as a whole, as the first time homebuyer market continues to shrink?
    • The market has to start somewhere, and first timers are a critical part of the market.
  • What will buyers sacrifice to get that house?
    • I’m having more buyers either choosing to have no kids, or just one kid … impacts of this?
  • What if we had better infrastructure that allowed people to ride or walk to what they needed?
  • Why aren’t we building what we need?
  • And a lot more that I ruminate over when representing my clients.
  • And new construction … what about the buyers under contract now with 2023 deliveries? What about the builders if any buyers cancel?


  • The market will be fine. We will be OK, it’s going to be be an interesting time. In the end though, everything will be OK.?
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