Rates double since March.
Watch the original video: Rates double since March.
Here is you November 2022 Market Insights by Chris.
Mortgage rates have doubled since the beginning of the year and home prices are changing quickly. In this month’s video I discuss why this has happened and what we can expect moving forward. Watch my video to learn more.
🇺🇸 Inflation in America
The Federal Reserve has continued to raise rates to combat inflation. Since inflation is a dangerous problem, they are fully committed to raising rates, even at the expense of home prices dropping and unemployment going up. Thankfully, many experts are predicting that we will see inflation reach its peak in the fourth quarter of the year.
📉 Inflation Trends
It is important to note that anytime inflation has gone up, the 30-year mortgage rate has followed; but consequently when inflation goes down the 30-year rates does too.
💸 Yesterday’s Prices & Today’s Rates
Mortgage rates have caused home prices to soften since there are less buyers that can enter the market and afford to purchase a home at yesterday’s prices and today’s rates. In markets throughout the nation we have seen prices drop anywhere from 5-10% in the last 90 days. It will take some shifts in the market to create some stability to allow first-time home buyers and lower to moderate income buyers to re-enter the market.
🧮 Equations to Understand the Market
Let’s do some simple math to illustrate what the market could look like over the next year. If home prices were to drop 10% from here and the home was then $360k, the payment would be $2,366. This is a $330 difference for a 10% price drop.
Let’s now look at what lower rates could do to this scenario.
🤔 Is it a good time to buy?
There are a lot of people thinking they should wait to enter the market for prices to drop. If we look at what has happened in the past, by the time rates drop and the market has bottomed out, there is such a high demand of people entering back into the market, that you may miss an important window to purchase a home.
Prices would have to drop 35% to make that difference in a monthly payment.
🪟 A Window of Opportunity
No one can really predict if it is a good or bad idea to wait to enter the market. What we do know is that rates are going to come back down and housing will find its way. When that time comes there will be so much demand coming into the market that people will be surprised how quickly prices move. Many experts predict that right now through the next 60-90 days may be the best window to purchase a home.
👍🏼 We’re Here to Help
In our office we are seeing how this window in the market is benefitting our buyers. We are seeing sellers pay for all closing costs, price reductions, and buyers purchasing homes at prices we have not seen for years. If you have a questions or thoughts on what I covered in this video please leave a comment and I’ll be happy to reply. I hope you have a great day, talk to you soon.
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