Real estate professionals looking to the new bear market and record high inflation are finding that they are changing their advice on how and when to buy a home.
Faced with record inflation of 8.6%, US regulators have also skyrocketed interest rates, causing many former potential buyers to remain on the sidelines of the already overheated real estate market.
Some mortgage experts told The Street that the housing market is still a difficult place to buy and sell, even if prices occasionally soften.
Tabitha Mazzara, Operations Director, MBANCSome sellers said they were waiting to bring their homes to market because they were worried that they might find themselves during their dwelling.
“I wouldn’t sell. If so, where would you live?” Mazzara said.
“It’s a highly competitive market due to low inventory and high demand,” she said.
“You might sell an old house and make money, but you still have to buy a new one, which may be in a smaller or less desirable location,” Mazzara said.
You may not be able to find a house for yourself
Sellers who decide to sell their home may not be able to make much profit.
Jacob Channel, senior economic analyst at Lending Tree, said the market is still chilling and sellers may see little profit.
“Don’t rush to sell your home just because you think you can get a price that’s significantly higher than you paid,” Channel said.
“If the price of your home soars, remember that the odds did the same for the prices of other homes in your area,” he said.
“This means that if you sell before you find a new place to buy, you may be priced from the current market.”
There are many signs that buyers are ultimately slowing down, but applying for a new mortgage is one of the most useful indicators.
According to data from the Japanese Bankers Association of Mortgages from June 10, purchase mortgage applications have fallen by 15% from the same period last year.
The channel said inflation, record high home prices, and newly soaring mortgage rates are gradual selection of interested buyers.
Scroll to continue
However, despite these factors, real estate remains in a heated zone for now.
“15% is a notable decline, but it’s important to note that the housing market is out of an unusually hot time, so this decline indicates a return to normal, not a major downturn. It may be, “he said. ..
So do you have to wait to get a mortgage?
Borrowing a mortgage is usually a very personal situation, depending on how quickly you need a new home and whether the market is affordable.
According to Channel, the warmer months of the year are usually the main season for home purchases, and so far weekly application data has increased slightly.
“But according to Freddie Mac data, the average interest rate on fixed-rate mortgages for 30 years has risen 55 basis points this week,” the channel said.
“Therefore, some of the typical increase in homebuyer demand that summer brings is likely to be offset if interest rates continue to rise,” he said.
Mr. Channel said he expects to see fewer and fewer mortgage applications over the years and buyers to be priced from the market at higher interest rates.
“As a result, mortgage applications could fall further compared to last year as interest rates continue to rise,” he said.
Ultimately, everyone is different when it comes to buying a home, Mazzara said. For most people, when they’re ready, they’re ready.
“Not everyone is ready at this point, but limited inventory will increase demand in certain states, such as California and Florida,” she said.
This kind of supply and demand problem only gets worse as more buyers are looking for it.
“Interest rates continue to rise and investors continue to enter the housing market, which only pushes prices up in the long run,” Mazzara said.
Buyers should be careful
If you’re thinking of taking out a mortgage, don’t forget to do your homework.
Buyers need to be aware of some danger signals that appear at what appears to be the end of an unprecedented real estate boom.
“This is a buyer who pays attention to the situation where there are many mortgage brokers (brokers, not lenders),” Mazzara said.
“There are a lot of mortgage brokers who have been plagued by the collapse of their refining business. They will advertise solid interest rates designed to seduce borrowers,” she said.
Mazzara warned that these types of ads could cause problems.
This means that when a borrower fills out a loan application with these intermediaries, the advertised rates are actually out of reach, except in the “very narrow” segment of the population. Because you can understand.
“For example, we find that this transaction is only valid for those who have a credit score of 780 or higher and can afford a 45% down payment,” she says.
Mazara said these are “bait-and-switch” tactics designed to mislead consumers concerned about rising interest rates. This may include advertising fees for brokers that are no longer available.
“Some borrowers may eventually leave after becoming wise with these misleading tactics, but delays in funding may mean losing their dream home. “She said. “”[That’s] It’s a very frustrating situation in such a highly competitive market. “