Will People Quit Buying Homes if Rates Hit 5%?

Redfin did a survey at the end of last year of 4,000 perspective home buyers and they asked them “If mortgage rates were to rise above 5%, what effect would it have on your home buying plans?” Their answers will surprise you—
27% said they would slow down their search in hopes that rates come back down again.
25% said NO IMPACT!
21% said it would increase their urgency to buy sooner.
21% said they would have to look in more affordable areas or buy a smaller home.
ONLY 6% would cancel their home buying plans.

This once again proves that interest rates don’t have much impact on buyers’ desires to buy a home. We had an incredibly strong real estate market from 1998-2000 when rates were in the 7’s and 8’s and of course mortgage rates hit 18% in the early 80’s.

What gives people confidence to buy a home? Job security, new job opportunities, and consumer confidence causes people to buy homes!