Mortgage rates rise upwards in inches (You can see here the lowest mortgage rates you might qualify forAnd home prices continue to rise, and many aspiring buyers are wondering: what should I know about the home market now?So — as part of our A series of questions to prominent economists about the housing market — we spoke with Dr. Lawrence Yun, Chief Economist of the National Association of Realtors since 2008 and its Senior Economist from 2000 to 2008. He oversees various surveys in the organization, including forecasts, existing home sales statistics, affordable indexing, and home buyer and seller profile reports. This is his idea.
As mortgage rates rise, buyers will have to re-execute the numbers
As mortgage rates are rising steadily, Yun recommends that buyers re-execute the numbers as mortgage rates rise. “Monthly mortgage payments can be higher than the buyer initially thought,” says Yun. Therefore, the buyer can review the budget, calculate the selling price and the current mortgage rate, and make sure that the house under consideration really has room and can be closed. .. ((((Look at the lowest mortgage rates you might qualify here.).
Inventory shortage continues
It’s no secret that housing demand exceeds current supply, and Freddie Mac estimates that the United States lacks about 3 million homes to meet buyers’ demand. “Remember that we’re still out of stock,” says Yun. Inventories will be a problem for the next few years, coupled with pandemic-related supply and labor shortages, and the projected start of construction (new construction) of about 1.2 million detached homes in 2023, according to Statista data. There is a possibility. It continues to push up house prices.
House prices generally remain high
Inflation is also contributing to rising home prices as the Fed continues to raise interest rates and mortgage rates rise, coupled with low inventories. However, unlike the previous housing bubble, lenders seem to be scrutinizing borrowers more closely, and according to Bankrate, mortgage borrowers’ credit scores are close to a record high of 776 in the first quarter of 2022. It remains. Underwriting mortgages was tough and nothing was interesting or dangerous, “says Yun.
Especially to prepare for the high prices of suburban homes
The telecommuting lifestyle that began during the pandemic meant that people would throw away their expensive metropolis bargains for vast suburban spaces. “Buyers need to be aware that suburban home prices are higher than downtown home prices as more workers expect more workers to commute to the office less often,” Yun said. say.
Some buyers are advised to consider a 5-year ARM
If a homebuyer may not stay in the home they are buying for more than five years, Yun says he should consider a five-year ARM. “These ARMs have lower interest rates than standard 30-year mortgages,” says Yun. In fact, the weekly Bankrate data ending June 6 shows that the average interest rate on ARM for five years is only 3.90%, while the average interest rate on fixed mortgages for 30 years is 5.57%. increase.