Two years after the raging, the housing market is finally starting to cool.
During the pandemic House prices skyrocket The market has reached a level never seen before, as some buyers have been forced to pay more than requested due to such high demand.
Experts say that Higher interest ratesAsset shortages, and material shortages are just a few of the reasons for lower demand.
The Federal Reserve will probably continue to raise rates to curb inflationHomebuyers will face higher prices, even though demand is low.
Buying a home is one of the biggest investments people can make, so buyers need to be well prepared.
There are many factors that homebuyers should consider before making such a large purchase.
Below are three important factors to consider before making a purchase.
1. Mortgage interest rate
Homebuyers are facing not only rising prices, but also rising mortgage rates.
Studies show That rate is 2 percentage points higher than it was just a year ago.
Volatility is typical, but many experts predict that it will continue to rise this year.
Farnoosh Torabi, CNET’s personal finance expert and editor, said: paper“Depending on the market you are shopping in, home prices may not cool as fast as interest rates rise.”
“That may mean that the longer you wait for this year’s purchase, the higher your monthly payments can be,” Torabi added.
Financial security and employment security are essential as buyers make such huge potential purchases.
By the beginning of 2022, 81% of homebuyers couldn’t afford half of the homes they sell on the market, according to economists from the National Association of Home Builders. report..
Therefore, potential buyers need to be prepared.
Patrick Duffy, founder and chief economist at Metro Intelligence, told Sun that preparation is one of the biggest mistakes homebuyers make.
“”poll It shows that the buyer is not prepared for the true cost of owning a home and is buying a home that he dislikes after moving in. “
He added that if a big decision is made in a hurry, it is often regrettable.
3. Trends and risks
It is important for homebuyers to be aware of the risks, as increasing inventory can quickly increase the affordability of a home.
One of the potential risks is war bidding.
June was recorded as a particularly good month after few months of low inventory.
according to Realtor.comInventory of available homes increased by 18.7%.
More availability usually means a bid war for people who want to stay within their budget.
moreover, Recession story This can ultimately lead to buyer overpayments, as homes may not be as valuable in the coming years.
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