The Impact of Rising Interest Rates and Debt on Housing Choices: Why Extended Stay Hotels Are on the Rise

Rising Interest Rates and Home Affordability

 Interest rates are climbing. Securing an affordable mortgage feels like a pipe dream. The average rate on a 30-year fixed-rate mortgage is now around 7.25% (NAHB). With this rate, only about 27.5 million U.S. households can afford to buy a median-priced new home (NAHB). 

Higher interest rates mean higher monthly payments. Housing market activity is taking a hit, with new and existing home sales dropping (U.S. Bank).

High Debt Levels

Debt is everywhere: mortgages, credit cards, student loans. It’s sky-high. Household debt hit an all-time high, making home loans out of reach for many (New York Federal Reserve).

Due to high credit card debt, many are failing to meet apartment rental requirements. This adds more pressure on the housing market. A report from the Urban Institute shows that as of 2023, nearly 40% of Americans with credit card debt are behind on their payments, directly impacting their ability to secure rental housing (Urban Institute).

The Shift to Extended Stay Hotels

Economic pressures are driving people toward extended stay hotels. These offer cost-effective and flexible alternatives to traditional housing. With amenities like kitchens and laundry services, they’re perfect for long-term stays.

Developers are catching on. In Phoenix, there’s been a boom in extended stay hotel construction. New spots like WaterWalk Phoenix – North Happy Valley Extended Stay Suites offer modern amenities and flexible leasing options (New Hotels Opening, WaterWalk).

The Importance of Credit and Eviction Checks

With more people choosing extended stays, hotel owners need solid credit and eviction checks. This ensures guests can pay and keeps the property secure. By vetting guests, hotels reduce risks and maintain a stable environment.

Guestban can help with this. It’s a cloud-based do-not-rent list that identifies individuals with histories of non-payment or evictions. This tool is essential for maintaining quality and profitability in extended stay properties.

Conclusion

Rising interest rates and high debt levels are reshaping the housing market, pushing more people toward extended stay hotels. For hotel owners, this shift offers opportunities and challenges. By understanding these trends and using tools like Guestban, they can capitalize on demand while protecting their investments.

FAQs

Why are interest rates affecting home affordability?

Higher interest rates mean higher monthly mortgage payments, making homes less affordable for many.

How does debt impact housing choices?

High levels of debt prevent people from qualifying for home loans, leading them to seek more flexible housing options like extended stay hotels.

Why are extended stay hotels becoming popular?

Extended stay hotels offer affordable, flexible living arrangements with necessary amenities for long-term stays.

How can hotel owners ensure they rent to reliable guests?

Implementing robust credit and eviction checks can help hotel owners vet potential guests and maintain property security.

References

• National Association of Home Builders. (2024). The Impact of Mortgage Rates on Housing Affordability. Retrieved from nahb.org
• New York Federal Reserve. (2024). Household Debt and Credit Report. Retrieved from newyorkfed.org
• U.S. Bank. (2024). The Impact of Higher Interest Rates on the Housing Market. Retrieved from usbank.com
• Dallas Federal Reserve. (2024). Lower interest rates don’t necessarily improve housing affordability. Retrieved from dallasfed.org
• Rocket Mortgage. (2024). How Rising Fed Rates Affect Home Buyers. Retrieved from rocketmortgage.com
• WaterWalk. (2024). Extended Stay – WaterWalk Phoenix. Retrieved from waterwalk.com
• New Hotels Opening. (2024). New Hotels in Phoenix AZ 2024 – Newest Openings. Retrieved from newhotelsopening.com
• Urban Institute. (2023). Credit Card Debt and Housing Rental Challenges. Retrieved from urban.org