After the blazing housing market during the pandemic, rising interest rates have cooled down the real estate frenzy. But that’s not necessarily bad news for buyers.
As the housing market heated up, many would-be homeowners found themselves unable to purchase due to multiple cash offers pushing winning bids too high. Now with mortgage rates rising since January 2022 to 7.04%, prices are starting to edge down in most housing markets.
Where’s the good news? According to Thersa Ghilarducci’s article “Looking to Buy a House? It’s Not the Worst Time” published in Bloomberg October 15, 2022, “Buying an asset when the price is falling is generally a good thing. Buying a home now when mortgage rates are high and housing prices are falling means as mortgage rates stabilize or even drop, your house value will more likely inflate than if prices were rapidly increasing and mortgage rates were increasing. Rising mortgage interest rates and a potential recession may seem like bad news, but these trends could benefit would-be home buyers by cooling demand and dropping prices further, especially if the buyers are confident they won’t lose their jobs and income.”
Although purchasing a house when interest rates and inflation are higher may not be ideal, this may be the perfect opportunity to consider buying if you can afford it. Not only can you avoid the bidding war that forced many buyers out of the market, you can always refinance once the Fed lower interest rates which some experts predict can be as soon as in 2023.
© 2020 CENTURY 21 Prime South Realty, Inc. All rights reserved. CENTURY 21®, the CENTURY 21 Logo and C21® are registered service marks owned by Century 21 Real Estate LLC. Century 21 Real Estate LLC fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Each office is independently owned and operated.