October is here and in true Halloween fashion, the rising mortgage rates are spooking off potential buyers faster than an inflatable Pennywise the Clown decoration scares away little trick or treaters!
Follow the national media headlines and you will get all kind of conflicting information. Is the housing market heading for a crash? Should I wait to buy until the prices come down? Unfortunately, I left my crystal ball at that costume party years ago, so I guess we will have to rely on some data below to help make sense of things…
The Federal Reserve has come just short of proclaiming that they are trying to stall the housing market as affordability is hurting their overall inflation metrics. So far, they are succeeding in that goal. Overall sale volume has fallen off sharply since March, which shows that demand is down by 28% since last year. That’s fairly substantial considering how low the available inventory has been.
Overall inventory has increased by 88% since last year, due to the weakened demand over the past 6 months! Expressed as a percentage, that seems like a lot, but remember that we were operating at a historically low amount of homes for sale. The good news for all sides of the transaction, we are getting close to a balanced market.
Buyers- I know you want to look at your payment amount and cry, due to the increased mortgage rate. Keep in perspective that mortgage rates rise and fall, thus there will most likely be an opportunity to refinance in the future. This could be one of the better windows to buy and lock in your purchase price though, as there is nowhere near the level of competition as last year.
Sellers- You locked in at a 3 point blank percent interest rate and you are struggling to do the math in your head to justify selling and purchasing a home near a 7% rate… I get it! People are going to be making more moves based on necessity and less trading up, as it currently doesn’t make much sense.
Only cautionary advise to leave both sides with… once rates start showing any sign of relief, I’m thinking the flood gates are going to open like the elevators from the Shining! The demand is going to pick up again, along with competition and appreciation. Then again, a new piece of data could come out tomorrow, next week, or next month that totally changes my opinion. So stay tuned and stay informed of the current market conditions.
