Source: The New York Times —
Buyers, sellers and renters are in for more twists and turns, as soaring mortgage rates and stubborn inflation signal belt tightening ahead.
Everyone is feeling the squeeze.
“Mortgage rates are sky high, prices are sky high, and there’s no inventory,” said Mark Zandi, the chief economist at Moody’s Analytics. “This may be the worst time in my living history for the home buyer — it just doesn’t make sense.”
Mortgage rates recently broke 7 percent, the highest since 2002, and more than double what most borrowers paid near the start of the pandemic.
Between soaring prices and rising rates, the typical home buyer in October paid 77 percent more on their loan, per month, than they would have last year, according to Realtor.com. With a national median asking price of $425,000 and a 10 percent down payment, that works out to an additional $1,117 every month.
Home contract signings fell for the fourth straight month in September, down 31 percent, compared with September 2021, according to the National Association of Realtors. The same month, search interest in the phrase “U.S. Housing Bubble” reached a 15-year high, according to Google trends data. The searches were most popular in Idaho, where the median home price in Boise was $549,900 — an eye-popping 51 percent increase since September 2019, according to Realtor.com.
The days of record-low mortgage rates are over, but juiced-up home prices have not fallen in kind. And sales are stalling, as both buyers and sellers wait for the other shoe to drop.
To make sense of the current housing market, we spoke with economists, mortgage brokers and real estate agents to plot the course ahead. Much can change, especially with economic headwinds on the horizon, but they all agreed that the market is cooling fast. Home prices are going to drop, just not to the extent some buyers have hoped for. Sellers are going to have to work for their closings again. And renters may finally get a reprieve from surging prices, even as prices stay well above prepandemic levels.
How low will home prices go?
Most analysts don’t expect home prices to free fall as they did after the subprime mortgage crisis in 2008, in part because of stricter underwriting practices, a big bump in home price appreciation and a class of all-cash investors waiting to swoop in when prices dip. But the cuts are coming, analysts said, perhaps as deep as 20 to 30 percent in markets that saw the most appreciation, particularly in the Mountain West region and the South. Still, most homeowners will have gained some equity over the past two years, even after a slide in home values.
Existing home prices soared 45 percent from December 2019 to June 2022, the start of the pandemic to the summer peak in pricing, the biggest jump ever recorded in such a short window of time, according to Standard & Poor’s CoreLogic Case-Shiller Home Price Index.
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You must be young if these rates and prices scare you. Try and survive in the business 44 years like I did (before retirement) and you will toughen up and keep liquid cash reserves so you don’t have to survive on heated frozen fried fish sticks for years at a time. One week after I got in the business FHA/VA rates went to 9%. Saw some 7% tandem money in 1974-75 for a while, low income bond money (10.25%) in ‘78.
It wasn’t easy but I didn’t know any better and worked soooo hard to feed the family and survive. It’s laughable when I see and hear all these whiners today. People won’t quit needing a place to live. Mortgages won’t stop the sky won’t fall. Think outside the box, grow your business and treat all your customers with honesty and respect. You will prosper.
I totally agree…THE ONLY PLACE THAT SUCCESS COMES
BEFORE WORK IS IN THE DICTIONARY,
Can I get an AMEN BABY!!! Sold my first real estate listing @17%… if you’ve never lived through double digit interest rates you need to sit down and hush! What goes up must come down.
I too lived through tumultuous times tracking Prime Rate on the half hour reaching 25%, and Home Loans were in the 16%-17% range too. The author must not have been around to see the lower home loan 9.25% rates in early 1991.
So yes, times are rough but not the worst in our country. We just need to elect those that are more interested in your benefits than their’s!
I am 73 years young and worked as a R.E. Broker since 1972.
I have worked in 4 states; California, Nevada, Colorado and Texas.
Despite the 4 economic downturns in 4 decades, I not only survived but continued to be successful.
We can only control our attitude and work ethic. Work persistently hard and work smart. Adjust your goals and your game plan. Find a need, a solution and fulfill it.
It’s not rocket science. You just have to put your head down and push forward. Your success helping buyes and sellers depends on your attitude. The market is what it is.
Families will always need Homes regardless of market/economic conditions. It’s your job to help them. As the market adjusts, we need to adjust our mindset and our game plan. If you wish to survive and thrive learn to live in the now.
So true – attitude is the key!
Well said Polidoro! It’s not the location or circumstances that determine failure or success, it’s “THE MAN” and his POSITIVE attitude with commitment that drives succes to levels most dreamers can’t even imagine.
understand the corruption of the “FED reserve” start 1913, google ” title 12, code 411 ” and note the word exchange for “LAWFUL MONEY” to today, not a gov agency, not any confirmed asset “other then a printing press, and now 95% USD float around the computers of the banks, not even paper, NO DIFFERENT THEN CRYPTO, with unlimited ability to put the FIAT currency into the hands of any corrupt politician or judge, and now wonder why the system is so screwed up, HELLO , we have to swim in this sewer until a better world comes, look outside and understand the landscape is NOT stable but moving per “their” command
Love all the positive comments, so great to hear something good for a change. Keep up the good work and posting the positive things in our careers.
I have spent 35years in Real Estate. When rates dropped to 8% we were dancing in the streets. We could not image at that time that rates could ever get down to 6%. People will just buy smaller houses or make the bigger payment.
So I like the general idea of wrenews. But can you please stop with the story jumping up and down while I try to read it? After 5 minutes I just give up. I can find all the real estate stories I want elsewhere w/o the constant jumping around.