(WHTM) — Could the red hot housing market be starting to show signs of slowing down? Possibly, with interest rates now at 5%, even higher. But, for home buyers, the market is still as competitive as it’s been in history.
The sign “bummer, pending” pretty much sums up the housing market in 2022. Homebuyer Nicole Bouchard has spent 4 months looking and losing house after house to other couples.
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“It felt really hopeless because houses were going before we could even see them,” Bouchard said.
But now, she and other buyers have a bigger problem: mortgage rates that have soared from 3.5% since last year.
“We were worried about the rates going higher, obviously because you can’t afford as much house, and if the cost of the house is still inflated, and rising interest rates what would we be able to afford,” Bouchard added.
It’s so frustrating for buyers, who have been coping with bidding wars and so few homes for sale. Now, they have to deal with rising mortgage rates, which are putting even more homes out of reach.
Realtor Michelle Sloan worries about some of her buyers giving up, unable to afford a home like this one that she has just put on the market.
The rise in mortgage rates will force a lot of buyers out of the market. Because they won’t be able to afford what they thought. So if they thought they could afford a 300,000 loan, maybe now they can only afford a 250,000 loan.” Sloan said.
Sloan also says homeowners should do the following:
- Lock in the lowest 30-year rate you can find
- Consider a three or five-year adjustable mortgage or A.R.M., but realize the rate could jump sharply after that
- Save up as much cash as you can for a downpayment
One bright side of rising rates: Sloan said they should eventually give buyers more homes to choose from as the market cools.
“I didn’t think inventory could get any lower, but it has,” Sloan said.
In the meantime, realtors like Steve and Denise Taylor said it is essential right now to have a good agent, who can go through a home for you if you can’t go see it immediately.
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“So we have some clients if they can’t come in person we will do a virtual tour with them, so they can have an opportunity to purchase the home,” they said.
Realtors said if mortgage rates continue rising, that can make many first-time buyers decide to wait, which would really slow the frenzy.
As always, don’t waste your money.