July’s LANDTHINK Pulse revealed 48.3% of respondents believe a long term rise in interest rates would deflate land prices.
Typically, when long term interest rates increase, real estate prices tumble. This correlation is likely due to the fact that most buyers have no choice but to finance a home or land purchase. A buyers’ purchasing decision is often based upon an amount they can afford to pay per month. Simply put, high interest rate equals high monthly payment. The average person has no desire to make a large purchase when interest rates are high; consequently, sellers that have to sell their property are inclined to offer it up at a great deal.
Last month, the July Pulse asked: If the Federal Reserve raises long term rates, what affect will it have on land prices? The overwhelmingly popular answer to our informal online survey was “Deflate Prices”. Coming in second, but not by a close margin, was the response “No Effect”.
Our survey results seem to confirm what most of us already knew to be true. When long-term rates rise, loans become more expensive and real estate becomes less affordable. Weaker demand, leads to lower prices.
Here’s how the final results panned out:
- 48.3% Deflate Prices
- 28.0% No Effect
- 23.7% Elevate Prices
Congratulations to John Morrow, winner of the $50 Amazon gift card after answering the July Pulse question! John is Associate Broker for Land Pros Realty in Gretna, Nebraska, and also a real estate attorney.
Thank you to everyone who participated and shared the Pulse with friends and connections in the land industry.
LANDTHINK is seeking sponsors for the September LANDTHINK Pulse and months thereafter. Sponsorship of the Pulse is an excellent opportunity for land industry businesses and professionals to receive significant exposure by leveraging our entire network of web and social media sites. Pulse sponsorships are offered on a first come first serve basis and are subject to certain limitations. If your business would be interested in sponsoring next month’s September Pulse question, please contact us soon.
What portion of your investment portfolio is in land? Tell us what you think! Click here to answer the August Pulse question. All respondents will be automatically entered to win a $50 Amazon gift card!
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