Interest Rates and the LBI Real Estate Market on Long Beach Island

How do Interest Rates Impact the LBI Real Estate Market?

Interest Rates and the LBI Real Estate Market on Long Beach Island
Interest Rates and the LBI Real Estate Market on Long Beach Island

Long Beach Island NJ and the LBI Real Estate Market

Long Beach Island New Jersey has been a favorite family destination for over 200 years. The same natural beauty of the LBI area which attached vacationers in the 19th Century still drives the local economy and the LBI real estate market. Most buyers in the LBI real estate market are looking for a vacation property both to enjoy the summers on Long Beach Island and also as a smart financial investment. Historically, even with the downturn in real estate after 2006 highs, the LBI real estate market has remained strong and investors have made money in the market. A key component to investment in the LBI real estate market is the impact of Interest Rates and the Long Beach Island Real Estate Market.

Interest Rates and LBI Real Estate Prices

Until recently, interest rates have been shockingly low allowing for many buyers to qualify for the purchase of a second home. With interest rates being so low, the affordable of monthly payments allowed buyers to purchase homes either at a higher price point or allowed some buyers to enter the market who would have otherwise been unable to do so. Interest rates therefore have a major impact on prices. Interest rates can impact LBI real estate pricing in the following ways:

  • As the higher interest rates climb, there is a chance that more buyers will be eliminated from the LBI real estate market.
  • Higher interest rates create higher monthly payments thereby making it harder to afford an expensive property.
  • A higher interest rate makes the long term holding of a house more costly thereby making the investment less appealing.

There is no exact figure as to how interest rates impact prices however a widely accepted number is for every 1% higher interest rates climb, a homeowner will end up paying 9% more for the house if the mortgage is held for a full 30 years. This shows how Interest Rates and the LBI Real Estate Market on Long Beach Island can be impacted by climbing rates.

The Real Estate Market on Long Beach Island

There is concern that if interest rates climb higher than 5% that the real estate market, both on Long Beach Island and the nation as a whole, will be negatively impacted. There is however a compelling argument for interest rates NOT negatively impacting real estate markets. Interest rates are climbing because the economy is performing better. Job reports are stronger and the stock market has shown large increases. This creation of additional wealth enables more buying of real estate. As more buyers enter the market due to their new found wealth, it will create a “supply and demand” situation where more buyers could be competing for the same real estate inventory on Long Beach Island. The real estate market on Long Beach Island New Jersey is also somewhat unique in that many buyers do not seek mortgages for their purchases. For these buyers, Interest Rates and the LBI Real Estate Market on Long Beach Island are only significant in their impact to market pricing as a whole.

Buying and Selling Real Estate on Long Beach Island NJ

If you are considering the purchase or sale of real estate on Long Beach Island in the LBI real estate market, please contact Nathan Colmer. I will be happy to discuss Interest Rates and the LBI Real Estate Market on Long Beach Island so you can determine if investing on LBI is the right choice for you!

Nathan Colmer | The Van Dyk Group

Cell: 609-290-4293 | Office: 800-222-0131 | ncolmer@vandykgroup.com

www.BuyLBI.com

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