3 Most Frequently Asked Questions From Today's Home Buyers
We're getting a lot of questions as we move into the late fall or midfall winter months of 2022. We're getting three predominant questions that we cover. That first one being...
Will interest rates continue rising?
Historically these are still pretty good interest rates. Yeah, it's just double what it was at the beginning of the year. And the shock to the system is the velocity that they've gone up. Which has created some acts. Understandably, we don't have a crystal ball. Obviously, it's important for us to realize that we're in this and mortgage rates have gone up because of inflation.This is a manmade issue right now and the Fed has made no secret that they're going to continue to make bumps in their interest rate, which trickles down to the mortgage interest rates as long as inflation is out of control, which it seemingly is. So noise has been made that mortgage interest rates have already built in the fact that there's going to be future Fed funds interest rate hikes. We would assume that interest rates will go up a little bit more before they come back down.
The reality of that is that historically we have seen that they will come back down. When that happens, we're not sure, but you can probably bet that they're going to go up some more before they come back down.
Every recessions interest rates come back down at the tail end of that recession. That's because the Federal Reserve lowers interest rates to spur the economy, to encourage spending. So we will see that come back down, we just don't know when.
What is going on with home prices?
The reality is that home prices aren't dropping drastically because of this interest rate. They're actually just decelerating. Meaning the amount at which we were increasing in sales prices is just slowing down.
It's a practical product of supply and demand. And the truth is we still are in an inventory shortage and there are still people buying homes, albeit less. Year over year there's 17% less showing activity and 27%, almost 27% more active listings. So we have a little more supply and less demand. But we're in such an inventory shortage that it's not depreciating yet. And most real estate experts feel that we're going to decelerate versus depreciate.
The practical aspect of practical feeling of real estate agents right now is that's essentially what we're seeing. We're not seeing a ton of home price reductions. And the ones that we are seeing are people that really were testing the top end of the market or testing beyond the top end of the market that we were seeing earlier this year and they're just coming back down to a more realistic range.
Should I get into the real estate market right now?
By and large, it's a personal decision more than ever, and you should always get the right information, perspectives to make good confidence decisions. You have to thoroughly look at your situation. If you are mentally and emotionally ready to take on the responsibility of homeownership, of making or maybe moving up into the next home, then you should start with the monthly number you don't want to go above(your monthly mortgage payment). And then working with a qualified mortgage lender you can reverse engineer based off today's interest rates on what that purchase price might be. And then you just start looking and seeing if there's anything out there that meets your NEEDS, and consider separating your "needs" from your "wants". And if there is, then take the next step. If there isn't, then stay on the sidelines until it's the right timing for YOU. The point is it's a personal decision, and one you should make as an informed decision.
So thoroughly take a look at your situation and go from there.
If you have any questions on how this impacts you or anyone you know, please feel free to reach out to one of our expereience real estate agents simply by filling out the quick form below.