How will interest rate hike affect San Antonio’s housing market? Local real estate, lending service weigh in – KSAT San Antonio

SAN ANTONIO – The federal reserve on Wednesday instituted its largest interest rate hike in nearly 30 years, but that is not expected to slow down San Antonio’s housing market.

Jack Hawthorne, CEO of Keller Williams Heritage, said the move by the feds could soften our market for potential buyers.

“As weird as this may sound, it’s actually a really exciting time if you want to buy a house,” said Hawthorne.

“People are kind of like, I’m not sure if I want to buy. I’m not sure if I want to sell. That means that sellers are not getting as many offers. Whenever you go out and you bid on a home, instead of competing against 27 other people, you’re competing against maybe two. And you have the ability to now ask for things you couldn’t before,” said Hawthorne.

Another thing Hawthorne said to keep in mind is if potential buyers are thinking about getting a house right now, they can wait for interest rates to go back down, but the value of homes in San Antonio continues to increase.

“Interest rates may go down to 3%, but that house is going to be valued 15 to 16% more when you buy it. So either way, the house is going to get more expensive to buy,” said Hawthorne. “What is usually the better option is buy the house, plan to refinance in a couple of years and rates go down because once you own it, you get the benefit of that appreciation.”

Hawthorne said while the appreciation we’ve experienced over the last several years “is wildly unsustainable,” prices are not going to go down, but appreciation is going to go down.

“We’re going to go back down to a normal rate of appreciation of 4 to 6%. But the prices, they now have a floor. There’s no expectation it goes down because we have such a major supply shortage in San Antonio,” said Hawthorne.

Lisa Arlette, vice president of Mortgage Lending San Antonio, said if you have been looking to buy a home for a while, it’s important to note some local families may be priced out with this hike.

“We’ve nearly doubled interest rates since January, so if they’re working with that predetermined information, it’s no longer accurate,” said Arlette.

“Debt to Income is one of the major qualifying factors within mortgage lending. If the DTI was tight before, it now have may crossed that threshold into not workable in that particular loan program,” said Arlette. “Get with a finance professional and recalibrate not only the expectations but also the qualifying parameters and to see what other options are available.”

Arlette adds it could be a good time to also lock in an interest rate, especially those that are considering new construction or are under contract for new construction.

“Then the next question is, do they offer the float down so if the market does improve in their favor, can they then make benefit of that as well,” said Arlette.

But Arlette and Hawthorne both said now is not the time to panic and we are not expected to see another housing collapse like in 2008.

“In 2008, if you had a pulse, you could get a loan. They were making over-leveraged loans. People could not afford to sustain them,” said Hawthorne.

“It was a combination of really questionable lending and predatory lending practices. That’s not the case today. The sky isn’t falling. We are now just back into a normal market setting,” said Arlette.

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