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MORTGAGE INTEREST RATES & RECESSIONS
20%
18% to 13%
17.5%
16% to 11.75%
15%
Interest rates historically tend to go up at the beginning of the recession and are then
12.5%
lowered to stimulate the economy. The result is a repeated increase in interest rates followed by a decrease. Here is a history of mortgage interest rates with the change in rates noted during each recession.
11% to 8.75%
10%
7.5%
6% to 4.875%
7.375% to 6.75%
5%
Mortgage rate
2.5%
3.75% to 2.75%
Shaded areas indicate periods of recession
0%
SOURCE: FREDDIE MAC COMMUNITY IMPACT NEWSPAPER
MAPPING OUT THE COST
June 15 announcement that another increase is up for further debate. Even before the interest rate increase, Webb said he had seen home buyers starting to be priced out of areas, such as Richardson, that are near Dallas. He said that has forced people to move farther north in the metroplex. Most of the sales price growth in Richardson has come from people moving in from outside of the metro- plex, including from California and New York, according to Webb. “Everybody’s kind of playing a game of musical chairs and trying to nd where they can still a ord to own a nice house and have a good life to raise their families,” Webb said. A seller’s market A lack of new construction and housing projects have led to increased competition for existing homes, according to Webb. “The pandemic brought construc- tion to a halt, which made several cit- ies unable to build homes to meet the demand for new houses,” he said. Webb said the halting of construc- tion ended up bene ting real estate agents tremendously as it generated more pro t from selling pre-existing homes rather than newly built ones. “A lot of these agents realized that they could sell $600,000-$800,000 houses and have better pro t margins than building $200,000-$400,000 homes,” Webb said. “As a result, the product they were putting out there wasn’t necessarily for the rst-time home buyers.” Webb said buyers are now able to make a choice on where they live
Percent increase of sales price of home from 2017-2022
These gures show how much the median sales price of homes in each ZIP code across Richardson has increased in the last ve years, according to data from the Collin County Realtors Association.
+51.3%
75082
PGBT TOLL
+65.7%
Changes in median sales price:
The 75081 zip code saw the greatest increase in median sales price over the past ve years but is still the most a ordable area on average to buy a home in Richardson, according to the data.
75080
JUNE 2017
JUNE 2022
+72.5%
75
$271,500
75080
$450,000
75081
$255,000
75081
$440,000
N
$391,00
75082
$591,500
SOURCE: COLLIN COUNTY ASSOCIATION OF REALTORS COMMUNITY IMPACT NEWSPAPER
But Webb said recently he has noticed the return to a more bal- anced market, where people are still able to sell homes while giving buy- ers more options. He expects further progress as sales continue to slow and prices begin leveling. “As this market evens out, hope- fully you’ll be paying closer to mar- ket value for the house,” Webb said. “Even though those interest rates may be rising, you’re going to be able to purchase homes at a more reason- able price.” Lower home prices could help buyers as the average salary growth in Richardson has not kept up with housing costs, according to the latest data from the U.S. Census Bureau. From 2015-2020, the average house- hold income in Richardson increased by 17.8%. In ation and a recent economic downturn is another factor that could further reduce housing costs,
according to Manasseh Durkin, chair of the Richardson Chamber of Com- merce board of directors. With in ation rising and sala- ries remaining steady, he said Fed- eral Reserve o cials have begun to increase interest rates. Real estate experts believe higher rates could limit the ability of potential homeowners to secure mortgages, which would make it more di cult to sell homes. “It is good for our houses to be valued high as an asset,” said Clin- ton Ball, president of the Highland Terrace Neighborhood Association. “However, the way the state and city value and calculate our taxes is increasing at an alarming rate, making it harder on many families.” While this trend has increased home values for many residents, Ball said it has also created new nancial challenges for some homeowners in the area. He described Highland Terrace as one of Richardson’s most desirable areas and said three houses
have been sold in the neighborhood in the last 90 days. City o cials have said high home prices can be bene - cial to the community. “When property values are strong, that’s an indication that the commu- nity is desirable and that the housing stock is well taken care of,” Richard- son City Manager Don Magner said. Market downturn After the federal economy posted two straight quarters of negative growth, in ation across the country rose to 6.3% in May, according to a U.S. Department of Commerce Report. In response, the Federal Reserve Board raised its e ective rates by 0.75%—the largest rate increase in nearly three decades, o cials announced June 15. According to federal reserve o - cials, the rate increase will limit indi- viduals’ borrowing power, which will impact their ability to le for mort- gage loans. Federal Reserve Chair Jerome H. Powell said during the
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