Can Rising Mortgage Rates and Waning Competition Counterbalance Housing Affordability?
The Fed’s inflation control strategy is proving to be a double-edged sword for priced out buyers who have struggled to find affordable homes in their respective housing markets over the last several years. Prices are still rising in most areas, and so too are mortgage rates, but that lack of affordability is cooling an overheated market. Home sales are slowing, inventory is rising, and some sellers are reducing their asking prices to keep buyers in the game.
The total number of housing units for sale nationwide was 1,260,000 at the end of June, up 9.6 percent from May, and while inventory is expected to keep climbing, housing experts warn that buyers who wait may be hit with even more price increases in an inflated market, The Washington Post reports.
“We’re all of a sudden seeing price reductions,” says Michael Manuel, a real estate agent with Long & Foster Real Estate in Old Town Alexandria. “We’re seeing interest rates rise. We’re seeing inventory up. We’re also seeing people that were so determined to lock into a 2 or 3 percent interest rate now all of a sudden sitting on the sidelines.”
But there can be danger in waiting for the market to shift, too.