Buyers Beware: According to one expert, you may need to think carefully about buying a home now.
“From an affordability standpoint, this may be the worst time to buy, as mortgage rates have skyrocketed quite a bit.” Christopher MayerHe is co-director of the Paul Milstein Center for Real Estate and a professor at Columbia University.
Mortgage rates have risen more than 2 percentage points since the beginning of the year, according to the . freddie macand remained at 5.55% as of August 25.
“Rising interest rates are taking a lot of momentum out of the housing market,” Mayer said.
Some buyers are nervous 63,000 home purchase contracts According to Redfin, cancellations in July represented 16% of the housing contracts that month. This is his highest deal release rate in more than two years, as buyers look to take advantage of slowing demand to regain bargaining power.
“Home sellers still want the home they would have had three to six months ago,” says Mayer. “As a buyer, part of the reason we see contracts canceled and homes on the market is because buyers see these fees and say, ‘I don’t want or can’t afford these prices. Because it says It’s a tough time to be a buyer as you can’t afford these prices and sellers are still sticking around. ”
Even real estate investors, who scooped up nearly a fifth of the homes sold in the US during last year’s homebuying frenzy, are showing a more conservative stance amid rising borrowing costs.
Redfin reported that investors bought 19.4% of homes sold in the second quarter, down slightly from 20.1% in the first quarter. This is the first decrease in two consecutive years of increase.
Real estate investors also bought 87,000 homes in the second quarter, according to new data. redfin That’s up 11% from the previous quarter, but down from the all-time high of 93,700 purchased in the third quarter of 2021, when mortgage rates dipped below 3% and homebuying craze peaked.
Doing the math, a typical home investor buying in the second quarter cost a record $474,000, according to Redfin, up from $427,000 the previous quarter and $423,000 a year ago, according to Redfin. With so many buyers on the sidelines, home flippers hoping to turn a profit may feel left out in a hot market.
“I think some of these institutional investors will face difficulties in the market trying to weed them out, but I don’t think it will be a buyer’s market,” Mayer said. “It’s going to be a tough market for most people looking to sell now. But it’s also a tough market for people looking to buy, so it’s not a great time for a home.”
Gabriella is a Personal Finance Reporter at Yahoo Money. follow her on her twitter @__gabriellacruz.