Why a tougher market for homebuyers isn’t necessarily great for sellers either
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As inflation and interest rates remain stubbornly high, the housing market is suffering.
Last week, the 30-year fixed-rate mortgage edged over 6% — first time it’s been that high in more than a decade. Builder sentiment is down in the dumps, construction of new homes is down sharply and so are sales of existing homes.
Meanwhile, home prices are rising more slowly than they did earlier in the pandemic.
Ask housing economists what it’s like now for first-time buyers, and you hear words like:
“It’s the worst time to buy a home in a very long time,” said Chris Mayer at Columbia Business School.
Or “they’re stuck between a rock and a hard place — both higher prices, after all the price appreciation of the last two years, and now higher interest payments in their mortgage,” said Jeff Tucker at Zillow.
Tucker said there is a silver lining — at least for buyers who haven’t given up looking in spite of high home prices and mortgage rates.
“The buyers who are left are facing less competition, less likely to be in a multiple-offer situation,” he said. Less demand for homes could put a damper on price increases.
But Columbia’s Chris Mayer said a lot of sellers would rather take their homes off the market than give up the profit they’ve been expecting.
“I wouldn’t be surprised to see sales volume fall further, to see some price declines, but limited,” he said.
And, he added, that’s not a great market for first-time homebuyers.
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