How Will The Increase in Mortgage Rates Affect Affordability and Appraisals?

Even though the increase in mortgage rates is a determining factor in how loans and lenders will be effected, the affordability of homes in Houston will not be in danger from the rise in rates, according to Marascia. Low inventory and homes going way above the list price are still the culprit of home prices increasing in the Houston and Dallas markets.

“I think home values will continue to increase because of the low inventory we‘re experiencing,” Marascia says. “Rates are still historically low. Anybody that looks at the last 5 years will see that sure, we’re not at three and a half percent anymore, but rates are still pretty fantastic. Hopefully homeowners won’t be scared off by rates, even if they are in the five percent range.”

Marascia thinks the rates won’t have any affect on appraisals as much as the effects of low inventory.

“People are willing to go over asking price, and if there aren’t comparable sales, then it’s hard for appraisals to come in at the purchase price,” says Marascia. “If there are 12 offers on a house, and it drives the price up by $10,000, we have seen some situations where people really want the house and they will have to make up the difference of the appraisal value versus the purchase price. In highly competitive markets like Houston, that’s a reality.”