Home News Buying a Home Gets Easier in a Cooler Market—for Those Who Can Afford It

Buying a Home Gets Easier in a Cooler Market—for Those Who Can Afford It

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A powerful combination of challenges facing buyers is housing market slowdown, but millions of homes are changing owners again this year. Some buyers would rather find now than trade. bidding war and defined invisible purchases last year’s hot market.

It took Lancer and Manfreda just a few weeks in September to find the home they wanted in the Boston suburb of Waltham. The new construction had been on the market for months, and the seller had cut prices several times. The couple offered their latest asking price and it was quickly accepted.

“The positive of lower interest rates was more important than the higher interest rates,” Lanser said.

The 30-year fixed mortgage rate they negotiated was 4.5%. higher than they paid one year ago. However, that alone was not enough to frustrate the purchase and continue renting in Boston.

Markets have slowed in essentially all regions and home types, and economists expect that to continue. Sales of previously owned homes fell almost 24% year-on-year in September to a seasonally adjusted annualized rate of 4.71 million units, the lowest level since the height of the pandemic.

The new construction property now owned by Eric Lancer and Alison Manfrieda has been on the market for months.

Rising interest rates have forced many buyers out of the market. He’s doubled to about 7% this year, including the average 30-year fixed mortgage rate, which has risen about 2% over the past two months.

Those who can absorb the higher mortgage costs are finding a calmer market.Last year many buyers Pay far more than the asking price It also waives common safeguards, such as the option to terminate the contract if there are problems during inspection or when approving a mortgage. Now they can land at a reasonable price over time and keep all the protections in place, realtors say.

American sucked the load of savings During the pandemic, and bank executives say US consumers are generally financially soundregardless of highest rate of inflation decades. Still, it takes a certain type of buyer to be able to buy a home in 2022.

The middle class appears to be the most ready to buy in the current market, according to Mike Fratantoni, chief economist at the Mortgage Bankers Association, an industry group.they are less susceptible to inflation lowest price buyer— It will also be less affected by falling stock and bond prices. high end buyer.

Purchase mortgage applications with balances between $300,000 and $510,000 declined less in September than smaller mortgage applications than larger mortgage applications, according to MBA data. (A person who puts her 20% down payment on the median home would have a mortgage of about $308,000.)

One of the bright spots in the market is that people are moving from expensive areas and buying into cheaper areas.

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“Rising interest rates hurt, but the market you’re moving into is still much more affordable,” he said.

The seller of the house bought by Eric Lancer and Alison Manfrida has cut the price multiple times.

Khater’s analysis found that purchases by people moving from one metropolitan area to another fell by half as much as those moving locally.

Jeffrey Zyjeski and Ashley Calabrese moved this summer to West Hartford, Connecticut, an hour from Sturbridge, Massachusetts. The couple sold their old house and bought a new one for less than the original asking price.

They wanted to secure their mortgage now in case interest rates continued to rise.they used variable rate mortgage The rate is fixed at 4.625% for the first ten years. ARMs typically offer lower interest rates than fixed rate mortgages for the first few years. Last week, they accounted for his largest share of mortgage applications since 2008, according to MBA.

“In the long run, waiting won’t do you any good,” said Žizeski.

Buyers with low down payment loans, such as those offered by the Department of Veterans Affairs and the Federal Housing Administration, will be able to compete with other buyers this year. About 27% of the mortgage rate lock in September was due to FHA or VA loan programs, up from 19% in January.

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Mortgage technology and data provider.

These buyers was relegated to the sidelines last year Sellers preferred to accept offers from people who paid cash or paid a large down payment.

There are still many buyers who use cash or forks instead of paying a large down payment. According to the National Association of Realtors, nearly a quarter of his buyers have paid all cash in recent months. This is about the same percentage as it was a year ago. But now they are doing it to keep costs down.

Housing is one of the most important categories when tracking inflation, but it is also one of the most complex to measure. WSJ’s David Harrison explains how the Shelter Index is calculated and why it’s clouding the Fed’s inflation outlook.Illustrated by Laura Kammerman

When Davis Kali bought a home in Inglewood, Colorado this summer, he cut the price by 30%. This made it easier for him to digest his 5.375% monthly mortgage, making it easier to maintain his rent payments.

His parents pitched him so he wouldn’t have to sell his investment at a loss. He bought the house for $600,000, which was $15,000 less than the asking price. .

“I was pretty lucky in that I got pretty much what I was looking for,” Kari said.

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