High Interest Rates, Low Supply Become a Door Slammed Shut for Some Area Home Purchasers


hand caught in door
Image via iStock.
nsufficient supply + high demand = ongoing difficulties in the area's residential real estate market.

The rising interest rates are chilling the hot residential real estate market, both regionally and nationally. The economics of new home ownership are becoming an issue, even among affluent shoppers, writes Sandy Smith for Philadelphia Magazine.

Two main forces are affecting suburban housing affordability: insufficient supply and continued high demand.

“While mortgage rates have been generally rising, there has not been a corresponding decline in prices because of the low supply in desirable areas,” said Jodi Bloom, Suburban Jungle Group’s Philadelphia head strategist. “Many buyers are finding it necessary to expand their search beyond the towns that they started with to consider more affordable towns.”

Meanwhile, developers are also finding themselves slow in producing new housing due to supply-chain and inflationary pressures. The sluggish progress toward completing a development precipitates higher costs to potential buyers.

“With the supply-chain issues coupled with rising interest rates and inflation, it’s really difficult to get attainable housing,” said South Coventry-based Rotelle Development Company CEO Peter Rotelle.

However, some relief may be coming.

“In the last few weeks, prices have seemed to stabilize and inventory is increasing, allowing more of my clients to have their offers accepted,” said Bloom.

Read more about the issue in Philadelphia Magazine.

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