(NASDAQ: RDFN) — Rising mortgage rates have significantly impacted homebuyers’ purchasing power, with a buyer on a $3,000 monthly budget losing $33,250 over the past six weeks. As the 30-year fixed mortgage rate reached 7% on October 28, Redfin (redfin.com), a tech-powered real estate brokerage, reported the first rate peak at this level since early summer, up from 6.11% in mid-September.
At a 7% mortgage rate, buyers with a $3,000 monthly budget can afford a $442,500 home, down from $475,750 with a 6.11% rate. Although purchasing power remains higher than in April, when rates peaked at 7.5%, the recent rise has dashed hopes for buyers who missed lower rates closer to 6%.
Higher rates have been linked to increased investor concerns over government spending and strong jobs and inflation reports, which may lead the Federal Reserve to opt for minimal interest-rate cuts.
For those still in the market, Redfin’s Chen Zhao advises, “Focus on negotiating what you can control, like sale price and repairs.” Sellers are advised that buyers are most interested in move-in-ready homes in good condition.
Swing States and the Election Impact
As housing affordability remains a top voting issue, rising mortgage rates are also affecting buyers in swing states where home prices vary. In Arizona and Nevada, buyers with a $3,000 budget have lost $33,250 in purchasing power, while buyers in states with lower median prices, such as Michigan, Pennsylvania, and Wisconsin, have seen a decline of $22,250 for a $2,000 monthly budget.
Purchasing Power Losses Across Swing States
| State | Median Price | Monthly Budget | 7% Rate Buying Power | 6.1% Rate Buying Power | Lost Buying Power |
|---|---|---|---|---|---|
| Arizona | $442,000 | $3,000 | $442,500 | $475,750 | $33,250 |
| Nevada | $468,000 | $3,000 | $442,500 | $475,750 | $33,250 |
| Georgia | $377,000 | $2,500 | $368,750 | $396,500 | $27,750 |
| Michigan | $266,000 | $2,000 | $295,000 | $317,250 | $22,250 |
| Pennsylvania | $296,000 | $2,000 | $295,000 | $317,250 | $22,250 |
| Wisconsin | $316,000 | $2,000 | $295,000 | $317,250 | $22,250 |
This data highlights how recent rate changes may influence both the real estate market and voter sentiment in key states leading up to the election.
About Redfin
Redfin is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country’s #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we’ve saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.
Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.
