MTG Rates make a huge difference to affordability
Here is an article from Fortune.
The crux of the article is that rates have risen so fast so quickly that houses are costing a lot more.
Now keep in mind the Fed is looking to raise rates another 50 bps at the next hearing; it is going to make even more of a difference.
But don't get FOMO; we are just seeing the follow-up from people paying prices that worked with a 3.5% interest rate, buying at 5%.
Prices are increasing simply because people continue to buy.
Banks and many realtors are trying to tell you that prices will go up forever and you will miss out and things will be worse later.
Realistically, there is a point at which people simply say the price is too high and stop buying.
This happens in the stock market and is happening now with a selloff. The same happens in the real estate market, and even more so now that institutional investors are buying residential real estate.
Considerations for Buyers
If you need to buy now, consider an Adjustable Rate Mortgage (ARM) as most people do not hold their mortgage for 5 years anyway, and these rates are much more manageable.
The Need for Supply
The key to all of this is we need more supply. That is not just more people selling their homes, but increased construction of housing of all types.
Comments