News & Opinions
The latest news and insights from Hanley Wood’s outspoken experts and key thought-leaders throughout the residential and commercial design and construction industry.
Retreat, not Panic: How Home Buyers Reacted to the Rate Spike
Glenn Kelman, CEO of Redfin / The Wall Street Journal / June 26, 2013
“The long-awaited day of reckoning is here,” Chris Farrell wrote in Forbes this week. “The era of historically low interest rates is over.” Mortgage interest rates began to increase in the first week of May, going from 3.35% to the headline-grabbing rate of 4.36% as of Friday.
What happened? Last Wednesday, Federal Reserve Chairman Ben Bernanke announced that if the economy continued to improve, the government would stop buying $85 billion in bonds each month by mid-2014. The stock market lost 3% of its value in three days.
Everyone wants to know how American home buyers will react to the rate increase, but it usually takes months for people to buy a home, and months more for records of such sales to become public.
In the meantime, the real estate industry remains bullish; confidence among home builders hit a seven-year high last week.
At Redfin, we see a slightly different trend. As a company of technology-powered real estate agents, we’re able to track how more than 6,000 of our home-buying clients across 25 U.S. markets are reacting in real time, touring homes and writing offers in greater or lesser numbers.
Our data from this weekend suggest that buyers already in the market remain engaged, but new buyers may be stepping back. Comparing this weekend to the average of the last three weekends, we found that:
The number of customers making an offer on a home increased 4%.
The number of customers touring a home increased 1%.
The number of new customers contacting a real-estate agent decreased 11%.