Navigating Interest Rate Hikes in Brunswick County – Part 2

Hello and welcome. This is Nolan with Discover NC Homes and Nolan’s News. This is the second segment of just talking about interest rates and specifically how they’re affecting our marketplace and certain price points.  So, in the $800,000 to $2,000,000 price category, which is our higher end price category for Brunswick County, I’ve been the first to say that interest rates at that price level are not affecting our buyer because most of those transactions have been and still are happening in cash, but the big thing we’re starting to see is that the interest rate is affecting our feeder markets that bring that buyer down here.

And what I mean by that is folks moving from New Jersey, New York, Maryland, D. C., Massachusetts, Connecticut, who, let’s say, sold their home or are trying to sell their home for 1 million dollars, they’ve lived in this home for 20 –  25 years., they purchased it at $400,000 dollars and throughout their lives have paid the home off. So they have a nice chunk of money coming down. Those markets are starting to slow, and that’s why I think we are starting to see a little bit of a slowdown in our higher end price category. So again, it’s not affecting that buyer coming down, but it’s affecting the buyer who’s buying that home up there.

So, if you look at a million dollar purchase and we’ve had an interest rate affected by that, and talking about the feeder markets now, at a million dollars, when that buyer is buying the New Jersey person’s home, who’s coming down here, they now have about $1,000 a month increase in payment. And that’s again coupled with the fact that over the last 3 – 4 years the entire nation has seen an increase in value. So, that is really the reason why we’re starting to see our slowdown in these cash buyers coming to our area and being able to buy cash. It is what it is, but I think we will finally stabilize but without the rates coming down, our feeder markets are going to slow down.

So, point is, our markets are still very good, but we’ve seen that slower, just down in the higher end price point. Now, if we look at the lower end price point or the more affordable price point in Brunswick County, let’s say that $300,000 to $500,000 price range, the increase in rate has just kind of like we talked about in the last video, just really slowed our market down because even at a $300,000 purchase, let’s say you’ve got a rate increase at 7.25% from 5.25%, that’s going to be another $300 to $400 a month in your payment. And a lot of folks just can’t afford that, coupled with the fact that that $300,000 house might’ve been $175,000 three to five years ago.

So we’re seeing the slowdown. Still in a very healthy market, but our higher end market is being affected by our feeder market slowing down. So if you have any questions, please let me know. As always, give me a call, and thank you for having us.

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