Odds are good Fed policymakers will raise interest rates this week, a move that’s been a long time coming. That has some home sellers jittery that higher borrowing costs might scare off buyers and slow the housing market.
Well, here’s some good news: Buyers aren’t blinking, at least not yet. Last month, when Redfin polled more than 1,100 homebuyers about the challenges of house hunting, rising prices ranked well above everything else, just like they did in our last quarterly survey.
Only 6 percent of buyers said rising mortgage rates were their top worry, below school quality, downpayments and no concerns at all.
 
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There’s more. When we asked people why they’re buying now, fewer than 7 percent said they were trying to get ahead of rate increases. Life events, such as growing families and aging parents, topped the list (24%). High rent was a big motivator (21%). More than 9 percent were buying because real estate is a good or safe investment.
While some Redfin agents have buyers eager to lock in rates, most say their customers are more worried about prices and the overall economy.
“None of my buyers have brought up concerns about rising interest rates. And I really mean that, not a word,” said Redfin agent Christopher Johns in Houston. “They’re more concerned that they get a good deal so they’re protected if prices fall.”

What if rates spike a point to 5 percent or more? Buyers would look for a cheaper house (47%), save for a larger down payment (22%), or not react at all. Only 14 percent would give up looking. That’s in line with what they told us in July, when a rate hike was far from a done deal, unlike now, when it’s all but certain.
 
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More than 70 percent of buyers know mortgages are bound to get more expensive soon. What keeps them up at night is prices, including fear that home values might fall after they’ve thrown the house-warming party.
“How do we know this isn’t another housing bubble and we’d be better off waiting for prices to drop in a few years?” said one first-time buyer in Seattle.

There was one group of people in knots over rate hikes — budget-conscious buyers shopping for the least-expensive houses. Almost seven in 10 of people looking to buy a home for $250,000 or less were worried about the cost of borrowing. That anxiety eases up the more buyers can afford, with people in the million-dollar market the most sanguine.
It’s no surprise that lower-income households are more sensitive to cost, especially as prices have grown faster than paychecks. It’s one element of the wealth gap that has economists apprehensive.
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Yes, mortgage costs are a crucial factor in affordability. But bidding wars, cash-rich investors and dizzying price gains have homebuyers more spooked than a highly anticipated, inevitable and small increase in mortgage rates.
“When the Fed makes its announcement tomorrow, remember that rates have been below 4 percent for 11 months of the last 12,” Redfin Chief Economist Nela Richardson said. “It’s  been an epic run.”
Redfin’s buyer survey was conducted between Nov. 15 and 18, collecting responses from 1,146 buyers in 35 states and Washington, D.C.
–With assistance from Taylor Marr
What are you thinking? Drop us a note. Lorraine.Woellert@Redfin.com