Whitelaw and Sons Real Estate Morgan Hill
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Robert Whitelaw, Realtor®

Robert Whitelaw, Realtor®

Published:Mar 6, 2023

Born and raised in Silicon Valley, Robert has helped clients successfully buy, sell and invest in real estate throughout Santa Clara County. Robert uses his local market knowledge to help clients across Silicon Valley!

The recent increase in national interest rates has caused quite a stir in the real estate industry, and it is not surprising that many prospective homebuyers are feeling the pinch. With interest rates hovering around 6.97%, it’s no secret that home sales will decline. The real question, however, is how buyers and sellers can navigate this situation to ensure that their interests are protected.

Local Rates

In Morgan Hill, San Jose, and Gilroy, the 30-year fixed loan interest rates for those with excellent credit are about 6.46%. While this may seem like a small difference, it can add up to thousands of dollars over the life of a mortgage. So, what can buyers do to get the best deal in the current market?

House Hacking

One strategy that buyers could use is to “house hack” by purchasing a multifamily home instead of a single-family home. In this scenario, the buyer purchases a property with multiple units, living in one unit and renting out the others. By doing so, the buyer can offset their mortgage payments with rental income, which can be a significant advantage in a high-interest-rate environment.

Additionally, buyers should focus on multifamily units of 4 or less to get advantageous interest rates as an owner-occupant. This is because loans for properties with more than four units are considered commercial loans, which come with higher interest rates and stricter lending requirements.

Buying a multifamily allows buyers to get more bang for their buck, as they can potentially generate income while still building equity in their property. It’s a smart strategy that can pay off in the long run, especially in the current market.

Fewer Buyers Out There

Buyers should also be aware that the coming months of March, April, and May tend to be big sales months that will be depressed by these higher interest rates. This means that there may be less competition in the market, which could work to the advantage of buyers who are looking to purchase a property.

Seller Strategies

Sellers, on the other hand, should consider offering seller financing in order to attract more buyers who are struggling with currently high interest rates. This option allows the seller to act as the lender, providing financing to the buyer in exchange for a promissory note and a mortgage or deed of trust. Seller financing can be an excellent option for buyers who may not qualify for traditional financing or who are looking for a more flexible loan structure.

It’s important to note that seller financing may not be possible for sellers who have a current loan on the home. In this case, the seller may need to pay off their existing loan before offering seller financing, which can be a significant hurdle.

Final Thoughts

Overall, the current high-interest-rate environment presents both challenges and opportunities for buyers and sellers in the real estate market. While higher interest rates may cause home sales to decline, savvy buyers and sellers can still navigate this situation to their advantage.

For buyers, house hacking with a multifamily property and focusing on properties with 4 units or less can be a smart strategy. For sellers, offering seller financing can be a way to attract more buyers who are struggling with high-interest rates. Ultimately, success in the current market will depend on staying informed and being willing to adapt to changing conditions.


  • https://smartasset.com/mortgage/30-yr-fixed-mortgage-rates
  • https://www.mortgagenewsdaily.com/mortgage-rates

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