Home prices are projected to fall 15%, however, with mortgage rates hitting 6% in some cases, cheaper prices won't necessarily make homes more affordable.
Finally, the housing market is cooling off, for now. As home prices hit record highs this year an increase in mortgage rates will deter many first, or even second-time home buyers from putting down roots. This increase sadly comes on the heels of information that home prices were dropping.
Home Ownership Still Appealing
This may still deter home hunters from purchasing a home. However, as rents increase, home ownership looks more appealing, if you can afford it. And, as NPR reports, home sales decreased for the 7th straight month. Mortgage rates have increased fairly sharply this year; from 3% to 6% in some instances.
No wonder the amount of homes sold today when compared to this time a year ago is down 20%. The Federal Reserve just raised interest rates in an effort to bring the US into a “soft landing”, a moderate slowdown of the market. With mortgage rates increasing as well, that landing may just be a little bit rockier than we all want it to be.
Home Prices Are Lower, But Are They Affordable?
As Tell Me Best recently reported, the housing market–which was a hotbed of excitement in May–is now experiencing a bit of a dry spell. And now, if someone finally could afford a $400,000 home, they are going to pay more due to the mortgage rate increase.
This doesn’t mean that a homebuyer couldn’t refinance after purchasing, however, they would have little luck decreasing their rate. Mortgage rates and interest rates are up. And we’re not quite sure how long they’ll stay like that.
With what’s known as “The Great Reshuffling” as workers were allowed to work remote, housing prices increased. Those who demanded that they remain, “remote” and actually work from home moved out further to nature or even moved out of the United States.
Working From Home, In A New Home
Homes that were new builds were in high demand. Due to this great reshuffling, prices rose by 23.8% Remote work accounted for 15.1% of that growth. But now, as mortgage rates increased, as well as interest rates, housing prices will cool, but still, is that dream of homeownership actually attainable?
The American dream, which was once to get a job, have a family, and of course own a home, is dying. Jobs are out there, but as the market stays volatile layoffs loom and the dream of homeownership keeps getting pushed out further and further.
Believe it or not, the country is in the middle of an intense housing shortage. For the entire decade after the housing crash in 2008, homeowners stopped building. Demand is up, but so are rates. We’ll all be a little bit, well, stuck when it comes to home ownership.
Home prices are likely to decrease, however. Home prices did increase dramatically over the past two years. But, what goes up, must come down. Will it be enough though to have that American dream become attainable again? Housing prices will decline about 15%, according to sources, but in some markets, it will be a while before home prices see a better price with attractive rates.