Advice for Home Buyers & Sellers With Rising Mortgage Rates
By: Mark Rutstein
Our very own Mark Rutstein was featured on CNN to talk about the rising, history-making mortgage rates. Watch above!
As of November 2, 2022, The Feds have raised rates for the 6th time this year. A .75 percentage point for the fourth consecutive time, to boot. Signals that high inflation will continue to cause rates to rise, however Feds say they plan on slowing down the frequency for the immediate future.
What does this mean for buyers?
For buyers, this means that they can afford less than they could several months ago. A 500k loan at 3.5% use to cost a monthly mortgage around $2400. Today, the same mortgage will cost a bit less than $3600. That’s a $1200 gain, monthly.
What does this mean for sellers?
Sellers will see buyers putting their search on hold in anticipation of a rate retreat. Unfortunately, this thought of a retreat won’t happen any time soon, as long as inflation rates remain high. Sellers will need to reprice their homes based on what buyers today will pay on a mortgage. Sellers are seeing a 15% reduction in listing price in comparison to 2021 market-highs.
Over all positives and negatives:
Let’s start with the positives. The days of 14% appreciation and 15-20 offers on every home for sale is over. Inventory is up, which allows for buyers to get in on property that previously would have been swiped up before even going to market. Negotiations and home inspections are back, which is a good look for buyers.
Negatives for sellers include missing the height of the market. Lots of signals were made early in 2022 that change was coming shortly. The rate hikes have worried buyers who haven’t heard of rates higher than 4% previously. Historically though, we had the opportunity to see some of the lowest rates in decades; rates we could possibly never see again in our lifetimes. For buyers, affordability looms as sellers are slow to react to the changed market.
If you have any questions about buying or selling real estate in DC, Maryland or Virginia reach out to us today at firstname.lastname@example.org or 202.498.1198.