Interest Rates Are Rising. What If You Want a House?

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So you’re saying this time is different?

Yes — and no. The facts always change, even if economic, stock and housing market cycles are regular (if not predictable or consistently timed) events over our lifetime.

And, oh, what a set of facts we have. A pandemic and the government response resulted in many people spending less on travel, commuting, clothes, student loan payments and entertainment.

That put extra money in the down payment accounts of those who didn’t lose their jobs or any income. At the same time, the mortgage bundles the Fed was buying helped lead to record-low mortgage rates.

That made it easier to bid up house prices — just as lots of people sped up moving plans in search of more space to work at home and keep kids out of their hair. There was even more competition for available homes, and new homes took longer to build because of supply chain issues and labor shortages.

There’s more. Professional investors were buying homes — with the all-cash bids that most sellers prefer and most individual owners can’t match — as never before in 2021. According to Redfin, they accounted for 18.4 percent of the home purchases in the fourth quarter of 2021. In Southern and Western cities — like Atlanta, Charlotte, Miami, Orlando, Las Vegas and Phoenix — investors accounted for more than a quarter of sales.

These institutional buyers are probably not done, either.

“It’s an absolutely terrible time to be a buyer,” said Sarah Ponder, a financial planner in Austin, Texas. There, the median home price has risen 30 percent in the past year, according to the city’s Board of Realtors.

Ms. Ponder, who specializes in helping real estate professionals and has already done five property transactions of her own in just 15 years of adulthood, pointed to one final X-factor: Folks her age may not know what rapidly rising interest rates do to one’s home-buying psyche.

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