Real Estate Reflections: Ripple effect of rising interest rates

As prospective real estate buyers continue to circle every new listing that comes to market, people are left wondering why the increase in interest rates hasn’t had a more profound impact on demand. Interestingly, the increase in interest rates has impacted supply more significantly.

Many older sellers are locked into their current homes, sitting on mortgages at 2.75%. To sell now, even to downsize, could potentially increase their cost of living. Further, there is a severe shortage of available housing for octogenarians. Our aging parents need first floor primary bedrooms. They want community services that ensure their lawns will be mowed and their driveways will be plowed. There is a demand for resort style living with onsite amenities for wealthy retirees.

Many suburbanites who have raised their children on the Sound Shore do not want to relocate into the bustle of downtown White Plains. In recent years, we have seen the addition of the St. Regis community in Rye and the Carraway luxury apartments in Harrison. Both communities were well received, and units traded rapidly.

Regardless of whether new developments are positioned for sale or rent, builders and investors alike should be looking at this void in the marketplace as an incredible opportunity for long-term growth. Hopefully, as interest rates come down, there will be attractive new listings available for our parents and grandparents, reopening the housing market for younger generations of home buyers.

Randie P. Paterno, Esq. is a real estate attorney with offices in Rye. Randie is licensed in New York, Connecticut, and New Jersey and lives in Rye Brook.