the national average mortgage rate for some clients hit 8% this week, depending on which website/tool you follow. Yes, housing is less affordable with higher rates, but will a change like this dramatically affect the market, or cause it to crash? See my answer below!

P.S. - Here is a daily mortgage rate update for those interested in the technical background to why mortgage rates are going up and down. You can bookmark this link as it always has the most updated information:

https://housingbrief.com/article/rate-update/6158b035c065b49f906c43e3



Will 8% rates affect the housing industry in a big way? Meaning, will it cause a bubble burst, crash, etc.? 

No, and here are two reasons why not:

1. We don't have nearly enough homes available. According to the most recent Greater Milwaukee Association of Realtors report, the Greater Milwaukee area would need 4,090 more listings TODAY just to have a "balanced" market, meaning a healthy inventory to support our current buyer demand. See the hyperlink above for the full report, super interesting data in there! Because we don't have enough available listings (and we haven't for years), property values are supported, even though mortgage rates are making housing payments even higher. 
2. The last time we saw mortgage rates seriously spike in recent history (October of 2022 we saw a 7% mortgage rate for the first time in years, and buyers hit the pause button), sellers offered credits / interest rate subsidies to make mortgage payments more affordable. If rates go high enough again that buyers meaningfully bow out, or exit the buying pool, then sellers will once again offer subsidies to make the new mortgage rates more comfortable. Sellers currently do not need to offer those credits on most listings because there is simply too much demand. Even during periods the average rates were around 7.5% -7.75%.
3. Homeowners saw on average a 5.7% appreciation in the last year, and so if they are looking to sell their home, they will have more equity to work with, so they can offer subsidies discussed in #2 to entice buyers. 

As a result, I don't think buying a home in Milwaukee will be any more affordable than it is today in the next 5 years - even with higher mortgage rates. Here is a PDF download for a few more reasons why I believe this.

Questions on this? As always, I'm a text away at 414-488-0438!

Have a great rest of your weekend!