Higher Rates Add $161 a Month on a $450K Jacksonville Home

The scuttlebutt over the past week and a half has been hard to miss. The Fed is hiking rates, the 10-year Treasury is climbing, and social media says mortgage rates are about to fly through the roof. According to that story, the housing market in most of the country is finished.

I don’t think that’s exactly true, and a lot of misinformation is swirling around, as usual. I ran a quick study to peel back the onion and compare what we experienced three or four months ago with what we’re seeing today.

July felt like a balanced market. At the end of June, heading into July, rates were in the mid-6s, and the housing market in Northeast Florida was moving pretty decently. It wasn’t a frenzy, though. Buyers were still negotiating, sellers were negotiating too, and both sides were working together in what was probably the most balanced market we’ve had in a while.

Buying power comes down to the payment. To measure how rates affect a buyer, I ran the numbers on a $450,000 house in Jacksonville. Depending on the area, that price could be a first-time buyer’s home, something nicer, or even a high-end condo. With 10% down at a 6.43% rate in July, the principal-and-interest payment came to $2,541 a month. Fast forward to a 7.03% rate, and the same house runs $2,703, so the buyer pays about $161 more each month and roughly $2,000 more a year.

Those figures exclude taxes and insurance, since neither has changed much. Insurance may actually be cheaper now, and if you haven’t shopped your policy, you’re probably overpaying. I’m happy to connect you with someone who can help.

Higher rates equal a modest price cut. Flip the question around and ask what that same house would need to sell for to keep the July payment. The answer is about $423,000, which is roughly $27,000 less. If you want to get into the weeds, the exact gap is closer to $26,900.

On a $450,000 home, that isn’t a huge difference. Sellers in this market have already been telling buyers to go ahead and make an offer. We’re often taking $20,000 off the sale price or asking for $20,000 in closing cost credits, sometimes 3% and up to 5%.

Don’t count on rates dropping soon. I think the market is overreacting a bit, even though rates are higher. Prices should ultimately come down, but it’ll take time because people resist change, and many are still holding out for rates to fall. Nothing I’ve seen suggests rates are coming down anytime soon, and the Fed may not be finished raising them.

Buyers should negotiate; sellers stay realistic. As a buyer, today’s market gives you an opportunity to get deals on pricing if you’re aggressive and negotiate as much as you can. As a seller, be realistic and be prepared, because prices will start to reflect the change as we move closer to a balanced market.

Stay calm, understand how to negotiate, and be patient in this market. Want more on these numbers or a look at what today’s rates mean for your own purchase or sale? Call or text me at 904-650-3890, email me at matty@pursuitrealestate.com, or visit mattymillerrealestate.com. I’m happy to run the numbers for your situation.