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Source: The Ascent —
It’s been a really tough go for prospective home buyers since mid-2020. For the past two years and change, the real estate market has sorely lacked inventory. That’s driven home prices upward and forced buyers into countless bidding wars.
This year, mortgage rates are also higher than they’ve been in decades, adding another layer of difficulty to an already hard situation. And unfortunately, it doesn’t look like housing market conditions are about to get more favorable for buyers anytime soon.
In a recent interview with CNN, Bank of America CEO Brian Moynihan said he’s concerned the housing market will continue to challenge buyers in the coming years. Moynihan pointed to sky-high mortgage rates as a big reason buyers might continue to struggle — especially first-time buyers with more limited financial resources.
Interest rates are not “sky high”…look at history..6 or 7 was pretty average.. prices are up when we have low inventory and many buyers..if some buyers are on hold..then those who can manage an interest higher than what we were seeing for a couple years ( 3-4 %) should get looking!! getting a refi could be possible in the future..you are not “stuck” for 30 years..there are options!
Elaine, you must be a very professional and very capable Realtor. I was a Realtor back in the ’80’s when the majority of resales were
Low equity VA/FHA assumptions. During that time I sold ONE new loan . .it was a VA loan at 17%. We were thankful when rates came down and leveled out at a low of 11% . . .ReFi ReFi ReFi.
Great reply!!!
She speaks the truth. As a REALTOR for 40 years, Today’s rates are Not Sky high. While higher than the previous two years, they are about average for the last 25. The ridiculously low rates of the past two years were unsustainable. The Fed was lowering the Fed funds rate beyond what was needed and at some point they had to start raising rates to curb inflation. The Fed does not set mortgage rates. There are many ways to borrow at the 5-6% range which is probably what everyone should get used to going forward. For the record, the 1st house I sold 39 and a half years ago was financed with a 3-2-1 buy down off the FHA rate of 18%
It’s not just the higher interest rate for new mortgages but the fact that many homeowners bought their current home at 3-4%, making it difficult for them to move up at a higher rate. Also, the higher rate, coupled with higher prices keeps many would-be buyers out of the market. Maybe it’s time to consider seller incentives and creative financing?
Absolutely! Sellers could pay 1 or 2 points to bring down the interest rate for the buyer. Or, perhaps they could carry back a 10% second ,so the buyer doesn’t have to pay private mortgage insurance .
Stay away from CNN and the dems, rely on the truth, Republicans. We all know Biden and his croanies are the cause of most every problem we are suffering from now. Quite frankly Biden is wrecking our country and there is no doubt about that. He will be an absolute joke/clown if he runs for a second term. He will lose and it will be more than a relief when he is gone along with all the other swamp creatures.
Biden has the USA in better finically position than any other country in the world. He’s not the problem, it’s supply and demand. What dose CNN have to do with anything? That’s just a TV station. ?????
I agree! Thank you for your comments!
Yes we may be better off then other countries, as we normally always are. but when your standing in dog crap does it matter how deep it is? He said elect me I have been in DC for 50 years I can right this ship. Like a said dog crap
Agree!
Why did you have to turn this conversation into a political conversation?
So you think it would be better if we had let a dispicable despot in the white house? Get a life! We would be in the Ukraine war now if that fool was in power!
Sellers (and Zillow) market homes based on the monthly payment (you can afford). Which simply means, if the cost of money increases then the sale prices must drop in order to have the same monthly payments that buyers can afford. It’s simple math.
It’s the reverse of what happens to prices when interest rates fell to 2%.
Home prices need to, and will drop to the psf that existed in the fall of 2019 minus the capitalized amount for increased interest. Home prices increased because the government inflated the money supply. Now that the Fed is reducing the money supply; and prices will deflate.
Notice I did not use the term home values. The values never changed. The only things that changed were buyer’s willingness to pay inflated prices because of all the money the government was giving away.
Buyers were like lottery winners feeling free to waste money that they hadn’t earned.
The punch bowl is being emptied. The party is nearly over. Everyone needs to adjust their thinking and that means buying based not on 2% interest, but based on values at 5-7%; or psf. If the interest rates continue to rise the sale prices will continue to fall.
Interest rates are like gravity to home sale prices.