Home News The ‘demoralizing’ process of buying a home in this unpredictable housing market. One home had 30 offers — and sold for $85,000 above asking.

The ‘demoralizing’ process of buying a home in this unpredictable housing market. One home had 30 offers — and sold for $85,000 above asking.

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First, they have had to contend with the buying frenzy caused by the pandemic. Potential home buyers are currently struggling with extremely high mortgage rates.

From the beginning of summer to fall, there is “a difference between day and night,” Riddish Kankariya, 37, told MarketWatch. “It’s crazy. It’s the kind of pressure we were under when it came to looking at and bidding on homes in the early days of COVID.”

Last year, the average 30-year fixed mortgage rate jumped from 3.69% to 6.7%. According to Freddie Mac. Last week that number hit 7%, but this week it’s gone down. mortgage news daily daily survey.

“It’s become a numbers game,” said Kankariya.

Rising interest rates “have posed a threat to the turbulent single-family housing market and the economy at large,” Mark Zandy, chief economist at Moody’s Analytics, said in a report.

“It feels like the middle class is being pushed out.”


— Erin Piedmont, social studies professor in Savannah, Georgia.

“How severe the damage will be will depend a lot on how high mortgage rates go and how long they last,” he added.

It’s no surprise that this is hitting house hunters. For example, 15% of the homes in cities in his belt that Sun signed in August failed, or nearly 64,000 homes nationwide were withdrawn from the deal. A recent report from real estate broker Redfin Corp.
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found.

They include the former pandemic boomtowns of Las Vegas, Phoenix, Tampa and Texas. A year ago, only his 12.1% of homebuyers had pulled out of the deal.

and, report From Caldwell Bunker Warburg released this week New York City has become a “tornado market,” he said.

Frederick Warburg Peters, president of Coldwell Banker Warburg and author of the report, said: You can also demolish one house while leaving the next house intact. ”

Homebuyers can’t rest

Potential first-time buyers like the Kankariyas are effectively shut out of homeownership, given the collapse in affordability, “higher mortgage rates combined with house prices pushed up by previously very low interest rates. It’s being done,” Zandi said.

Kankariya and his wife are looking to purchase a North Jersey home on the banks of the Hudson River.

They began considering buying a home during the pandemic, but it was a “chaotic and unfulfilling experience,” Kankariya said. Day.

Riddish Kankariya and his wife, Chandni.

(Photo credit: Riddish Kankariya)

For a first-time buyer like him, it was “nerve-wracking,” Kankariya said.

Kankariyas was looking for a new home, ideally a two or multi-family home, given the tough supply chain issues that can complicate and prolong the conversion of existing homes.

But they continued to overprice the homes they liked, even though they consistently exceeded their demands. .

“So we decided to find an apartment…and try to wait through this whole pandemic madness,” he added.

But now that markets are cooling, interest rates are rising instead. “We all knew it was written on the wall in terms of rising mortgage rates,” Kankaliya said, but “as for how dramatically mortgage rates would rise, it’s really hard to say. I don’t think I was grateful,” he said.

“I feel like the middle class is being kicked out,” Erin Piedmont, a social studies professor who recently sold her home in Alabama and moved to Georgia for a new job, told MarketWatch. .

Piedmont, 40, and her husband are also considering buying a single-family home in Savannah, Georgia, close to where they work at Georgia Southern University. She currently rents a single family home. Because they keep bidding high prices on homes they like downtown.

Erin Piedmont and daughter.

(Photo credit: Erin Piedmont)

They first started looking for a home in May. His one of the homes they really liked, in two days he had 30 offers and sold for $85,000 more than he asked for. And the buyer paid in cash.

A recent weekend home search was also unsuccessful. They saw a charming detached house. It looked promising even though it needed remodeling.But the realtor who was showing them the house said a potential buyer was looking at the property with the intention of turning it into an Airbnb.
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Charges were another matter. Before the Piedmonts moved to Savannah, her estimate was 4.5% when she spoke with her mortgage lender in April. When she went through the paperwork to get her pre-approved 90 days later, the couple were offered a 6% estimate because they hadn’t bought the house yet.

“People with a lot of money can buy a house now, even with higher interest rates. It’s the middle class who can’t afford the fees right now,” Piedmont said.

“The higher interest rates go, the less our budgets get. We can’t even find what we really want,” she added. “We were very excited about buying a house, but we were depressed.”

Homebuyers are under pressure to act quickly as interest rates fluctuate

2022 will see a significant increase in homeownership prices as mortgage rates rise and 30-year rates briefly hit 7%.

Combined with the fact that home prices have yet to fall from their highs, affordability is a major issue for potential buyers.

The median price of existing homes was $389,500, up 7.7% from a year ago. The National Association of Realtors said in late September.

Josh Lewis and wife.

(Photo courtesy of Josh Lewis)

“The monthly mortgage payment for a median-income household looking to buy a median home with a 20% down payment at a typical mortgage rate is about $2,000 a year ago,” Zandi said. has increased by $700 from

“Until it becomes clear that the Federal Reserve has ended rate hikes, interest rates will not go down, which is unlikely until the end of next spring’s home sales season,” Zandi added.

Josh Lewis, a 36-year-old audio engineer, told MarketWatch that the high interest rates are “a bit disappointing.”

Lewis and his wife are former Army veterans planning to sell their current home outside of Los Angeles and move to Seattle.

They bought the house about eight years ago for $400,000 and have since gone up to over $600,000.

Lewis said he has been looking at homes in the Tacoma area and plans to settle down for five years before returning to school to focus on completing his master’s degree.

Lewis said he could find a decent home on a budget of less than $500,000. But interest rates are rising rapidly,” he said. “The price range continues to adjust as it has changed significantly over the past six months.

The Piedmonts sold their Florence, Alabama home for $420,000. She just refinanced her house at a 2.8% interest rate, which she said was “kind of a dream.” They paid $317,000 for it.

The US housing market is seeing a slowdown in home sales as the Federal Reserve raised mortgage rates to help fight inflation.

(Photo by Alison Dinner/Getty Images)

Home prices expected to fall soon: Experts

Kankariyas and Piedmonts are stuck playing waiting games and renting while trying to buy a home.

But they could be doing well soon, with Zandi expecting home prices to “get back to reality soon” based on his predictions.

Barring a recession, he expects house prices to fall 10% from peak to trough, and bottom out in the summer of 2024.

A majority of the expert panel surveyed by Zillow expect the housing market to be buyer-friendly by 2023.

But if the economy reverses and hits a recession, the peak-to-valley decline could approach 20%, with parts of the South and Mountain West seeing declines of 30% or more, Zandi said. added Mr.

Majority of expert panels surveyed by Zillow
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expect the housing market to reverse Buyer Favor by 2023.

Zillow senior economist Jeff Tucker told MarketWatch: Frothy markets like Phoenix and Seattle have already started to cool in the past few months, he added.

“Prices have to come down at some point,” Kankariya said.

Piedmont added that her former home in Alabama was sold to someone who was planning to remodel the house and turn it into an Airbnb.

Thinking of buying or selling your home? Thinking about the housing market? We would love to hear from you — contact his MarketWatch reporter Aarthi Swaminathan at [email protected]

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