Buying a House in New York | As Loan Interest Rates Rise, Will New York House Prices Fall As a Result?

Compared to other cities in the United States, New York City’s real estate market is unique. Rising loan interest rates, inflation, the return of New York’s population, and high rents in New York have all become factors affecting the trend of New York’s real estate.

The biggest concern for many buyers these days is whether rising mortgage rates will cause New York home prices to fall . Today, we invited Mona, the ace licensed broker in New York, to analyze the impact of rising loan interest rates on the trend of New York housing prices from a professional perspective.

Everyone knows that interest rates have started to rise, and loan buyers should get in as soon as possible to lock in lower interest rates as much as possible. But if the loan interest rises, will the house price fall? My answer is that the increase in loan interest will indeed affect the real estate market, but in terms of price, I don’t think it will fall.

First of all, we are talking about the real estate market in New York. Different from other cities and regions in the United States, the overall real estate market trend in the United States does not represent the real estate trend in New York. The reason is that the biggest feature of New York real estate is good value preservation, high risk resistance, high cost, and less bubbles .

Since the rent in New York is too high and rising every year, the houses for sale and purchase in New York are mainly self-occupied houses in the market circulation. Therefore, qualified buyers will choose to buy a house to meet their living needs, plus New York real estate is stable, low risk, and has a small appreciation every year , so there will be a cash return after selling it in a few years, which is also the main reason why young people in New York buy houses.

The main factor affecting the New York real estate market is the supply relationship of the real estate market itself . For a long time, this supply relationship has maintained a relatively balanced state, with fluctuations, but not much.

Even in 2020, which was affected by the epidemic, the New York real estate market did not experience a severe collapse, and it regained its vitality at a very fast speed, and there was a wave of rapid rises. The reason is that New York’s urban vitality and population attractiveness are among the best in the world , and New York is a city where comprehensive industries converge. The decline of individual industries will not affect the vitality of New York as a whole, which is the basis for the preservation of property values ​​in New York.

As long as there is a steady flow of people in New York, the house will be an absolute demand, or even a scarce resource, so buyers who buy a house in New York probably have a bottom line. A house in a good location in New York will not buy a house because of its high cost. There are speculative opportunities, but stable, as long as time is put in, the return can be guaranteed .

So speaking of the impact of rising interest rates on housing prices, I think that rising interest rates can affect the speed of the market, not housing prices to a large extent . 

Before the epidemic, around 2016-18, when the New York real estate market was at a high point, the loan interest rate was already above 4, so around 4 is a normal interest rate level.

Then, due to the impact of the epidemic, the government adjusted the loan interest rate to below 3, and after rising back, buyers at this stage will have a period of adaptation, which refers to psychological adaptation . So at this stage, the market will be relatively calm for a period of time, and sellers’ listings in the market will be longer. This should be certain, but I don’t think the price will drop significantly .

The main reason, as I said, is that New York is dominated by just-needed buyers. Those who should buy a house should still buy it . After buyers adjust to the new interest rates, the market will still return to normal levels and transaction speeds, because demand is continuous, and in this area of ​​New York, where the world’s elite talents gather, there will always be people who are willing and able to buy real estate.

We can’t ignore a big devil, that is inflation ! At present, it is known that the inflation rate in the United States has exceeded 10% , which is an unprecedented large inflation . We should all feel the soaring prices. The basic materials of life in New York that have not changed for several years have doubled in price. The materials went up, the raw materials went up, the building materials went up, the developer’s cost went up, and the house price went up. 

Inflation will definitely affect real estate prices. Of course, there will be a long delay in the reflection of real estate prices. If it is a slight inflation, then the interest rate adjustment may balance the market price, but in terms of the severity of this inflation, I don’t think the bank interest can outpace the rise in house prices, so I predict that by the end of this year or the beginning of next year, Inflation will be reflected in house prices, and New York’s house prices will usher in a larger increase due to the depreciation of cash . 

Likewise, cash buyers need to find the right time to buy a property of value to fight inflation before prices rise. Otherwise, if you miss the opportunity, your cash will depreciate in value. At that time, you may be able to buy a 1bed, but you can only buy a studio or be more nervous.

Finally, to sum up, rising loan interest rates will indeed affect the New York real estate market, and the market will have a cooling-off period, but because of New York’s urban characteristics and the impact of inflation, New York’s housing prices will not fall, and may even show an upward trend .

So that’s all for today on the impact of rising mortgage rates on New York home prices! Are you also impressed by the professional analysis of New York star agent Mona?

Mona is a licensed real estate agent in New York. He has more than five years of experience in real estate buying and selling in New York. During this period, he has helped thousands of clients settle down in New York, with a 100% favorable rate from clients.

Below is the contact information for New York star agent Mona

You can ask her if you have any questions!