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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