Impact of Rising Interest Rates on Buying and Selling Homes
Discover how interest rate increases affect the decision-making process for buying and selling homes and what this means for you.
It appears that the sky-high housing prices in the overheated housing market may be coming to an end. The increase in mortgage rates is a significant cause of reduced competition among buyers. Inflation is also contributing to a cooling effect, as well as rising energy costs and consumer uncertainty. The diminishing frenzy in the housing market is resulting in fewer viewers and lower offers. The rising interest rates have an impact on both the buyer's and seller's sides, affecting borrowing capacity, the number of viewings, and offers. Therefore, it is crucial for sellers to make their homes ready for sale and adjust their sales strategy.
Rising Interest Rates and Their Impact on Borrowing Capacity
The increase in interest rates directly affects borrowing capacity for obtaining a mortgage. A higher interest rate increases monthly expenses, reducing the borrowing capacity for buyers and causing housing prices to rise more slowly or even decline.
Significant Increase in Interest Rates and Monthly Mortgage Costs
Since October 2021, there has been a significant increase in interest rates, approximately 2.5% in a nine-month period. Such an increase has occurred before, but with a longer spread over two to three years. It's also uncertain when and where the interest rate hike will end. Nonetheless, the consequence is that buyers facing lower borrowing capacity are less able to make higher bids.
Example of Increased Monthly Costs:
At the beginning of the year, for instance, the monthly expenses were €650 for a €200,000 mortgage. The rising interest rates have caused the monthly expenses for the same mortgage to approach €900 by June 2022.
Fewer Viewings
The increase in mortgage rates is leading to lower borrowing capacity and fewer viewers. The number of viewings per home is decreasing. Compared to the previous year, there were nearly a third fewer viewers for homes in mid-2022. The number of viewings has been declining for several months, indicating that consumers are exercising more caution.
Fewer Bids
With fewer viewers, there are also fewer offers. Potential buyers are less likely to bid well above the asking price. If there are overbids, the amounts exceeding the asking price are significantly lower than before. It's only gradually dawning on viewers that it's no longer necessary to overbid by exorbitant amounts.
Increased Urgency for Sellers
The rising interest rates also seem to be prompting sellers to act more urgently. This is because the peak of asking prices and overbidding has been reached as the frenzy in the housing market subsides. Some homeowners who are waiting for the completion of new-build homes now want a quick sale to secure their plans. Consequently, there are more existing homes for sale, but the number of viewings and bids is declining. Sellers must adjust their sales strategy to adapt to the changing housing market.
Adapting Sales Strategy to the Changing Housing Market
An overheated housing market requires a different strategy than when sentiment shifts. It appears that the housing market has reached this point, so it is wise to adjust the sales strategy professionally. Amstelland Makelaars has the expertise and resources to determine a successful sales strategy.
Getting Your Home Ready for Sale
With declining viewings, it is crucial that your home looks its best. This means it is advisable to make your home optimally ready for sale. This may include addressing deferred maintenance, applying neutral colors to walls, and fixing a leaky faucet or loose tiles. We are happy to provide advice on preparing your home for sale as part of our successful sales strategy.
Determining the Right Asking Price
In the changing housing market, it is also important to set the right asking price for your home. This requires expertise and insight into the local and regional housing market, something we have in Amsterdam and the surrounding areas. The amounts offered above the asking price are decreasing. That's why it's important not to set the asking price too low. It's no longer a guarantee that a hundred thousand euros will easily be offered above the asking price for a home. For a quick sale, it's not recommended to set the asking price too high either.
Styling and Furnishing Make a Difference
As an additional part of a successful sales strategy, it's essential to know that styling and furnishing can make a difference. Viewers want to imagine themselves living in the new home, so the interior should reflect that.
Showcasing Your Home
In addition to making your home optimally ready for sale, it is also important to ensure your home reaches the target audience. We promote your home in multiple ways, such as through our own display and social media. A listing on Funda always generates interest, as does the attention we bring through a professional sales brochure. We also present your home on Huislijn.nl and Jaap.nl and on social media platforms like Instagram, Twitter, and Facebook. This way, there is maximum exposure.
Exceptional Service from Amstelland Makelaars
Do you want more assurance and a successful sales strategy? Contact Amstelland Makelaars, where you can expect perfect service and clear communication. We also offer competitive fees based on tailored service. You will always pay a fair price for selling your home.
