High Rates? Sellers Still Have the Edge

By Mike Vonderau

Mike Vonderau is a top-rated realtor specializing in the west side communities of Cleveland, Ohio, and serves as the managing partner of Vonderau Real Estate Team.

Many buyers and sellers are asking if high mortgage rates have brought the Cleveland market to a standstill. The truth is more complex. Rates have changed the pace of sales, but prices remain strong because supply is still limited. Understanding how these factors interact will enable you to make more informed decisions.

What changed with rates? Mortgage rates moved from the 3% range to the 6% and 7% range within a short period. That shift made a significant impact. National home sales dropped by about one-third after the jump. While these rates are not historically high compared to the double-digit rates of the 1980s, the sharp increase from recent lows created hesitation. Many homeowners with 3% loans are choosing not to move because replacing that mortgage with a 7% loan is costly.

How do sales and prices interact? Fewer people are listing their homes because they are locked into low rates. This has kept inventory low across the country. In the Cleveland area, the supply has remained highly tight for over five years. Even with fewer transactions, prices have continued to rise at an average annual rate of 5% to 6% in many communities. Limited inventory is the key factor keeping values up despite higher borrowing costs.

What happens if rates fall? Historical data show that when interest rates decline, mortgage applications increase almost immediately. Buyers gain more purchasing power, which draws more people into the market. If this happens again, competition could intensify, and the seller’s market could strengthen even further. More buyers competing for the same number of homes often results in faster sales and rising prices.

What does this mean for buyers and sellers? Buyers waiting for lower rates may face a more competitive environment later. Even if financing becomes cheaper, increased demand can lead to higher prices and bidding wars. Sellers benefit from today’s low inventory and steady appreciation. Listing in a tight market often results in strong offers, provided the property is priced correctly and presented well.

High interest rates have slowed the pace of sales, but low inventory continues to drive steady price growth. Buyers need to understand how rates affect affordability and competition, as well as how waiting for a lower rate could result in facing higher prices later.

Sellers should recognize that limited supply gives them a strong position if they price and prepare their homes correctly. Review your options carefully, consider how both rates and supply shape the market, and develop a plan that aligns with your goals.

Always seek guidance from a trusted professional who understands today’s conditions and can help you move forward with confidence. If you have any questions about buying or selling, feel free to call or text me at 440-871-3050 or email me at mike@vonderau.com. I look forward to hearing from you!