A new normal for the housing market
There have been a few pieces of news driving conversation around the state of the housing market this week. We saw new data from the National Association of Realtors that purchase contracts dropped by 8.6% in June. We also saw the Federal Reserve raise interest rates again in a continued effort to curb inflation.
Intense speculation around the trajectory of the market continues. But even as things are cooling off, there are still key fundamental differences between current conditions and the last housing crisis. We’ve reached a new normal, and it looks very different from the frenzied activity of the past two years – but that’s not necessarily a bad thing, especially for buyers.
Those who have been waiting on the sidelines may even see an opportunity to get back into the market as things normalize a bit and volatility wanes. But like everything else, timing is everything – and your decision to buy (or not) is no exception.
– Robert Heck, Vice President of Mortgage @ Morty
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Reader question of the week
My rent is going up like crazy. I have some savings and want to buy a home, but the current interest rates limit what I can afford. Should I stick it out until rates come down?
We get this question a lot in the current environment. The challenge here is that it’s impossible to time the market. Rates have risen from the historic lows of 2020 and 2021 and rents are skyrocketing, while high inflation continues to eat into savings. Over the past few weeks, we’ve seen the housing market finally settle in a bit, as buyers and sellers adjust to the new reality.
Time is always going to be a factor, but it’s really about your own timeline more than the state of the market. Ask yourself how long you plan to stay in your next home, and think about your total cost (including things like taxes, maintenance, and insurance in addition to your mortgage payment). How does it stack up against the amount you’ll be spending on rent in the same period?
Income, age, financial goals and life plans are all factors to consider. But the bottom line is that the market could very well remain in its current state for years to come, so be sure to consider your own timeline first and foremost.
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