How To Buy a Home Amid Record High Prices
The red-hot US housing market set another record last month, with the national median sales price exceeding $400,000 for the first time ever. According to the National Association of Realtors, that’s a 26.5% increase from 2020. Market observers report it’s caused some prospective buyers to abandon the idea of owning a home altogether, at least temporarily.
Economists say this has been reflected in the form of falling demand, especially as mortgage rates have risen in recent months. The broader price increase has also been driven by millennials’ demand for more expensive properties in the suburbs.
Prices Steady Despite Rising Rates
The average 30-year mortgage is at its highest level since 2019, according to Freddie Mac data. This limits some buyers’ ability to purchase a home given the added monthly cost, all while many face difficulties covering existing payments, such as student loans. As rates have risen, the weekly number of mortgage applications has fallen.
Despite the decreased demand for mortgages, home prices appear unlikely to decline in the short term. Online real-estate marketplace Zillow says housing inventory is extremely low and won’t get back to pre-pandemic levels until 2024. At the same time, inflation has pushed wages higher, meaning more buyers can afford the higher home prices.
Tips and Tricks
When trying to overcome the obstacles homebuyers face right now, there are a few tips to consider. One is to pay close attention to how long homes have been on the market. In some cases, the longer a property remains for sale, the more willing a seller is to consider offers. Get to know the average number of days homes remain on the market in your area.
The bottom line is that whoever is willing to pay more will typically carry the day in any bidding war. Still, there are other ways to help secure a deal, like being flexible with the closing date. Getting pre-approved for a mortgage is another great step, as it can help your offer stand out from the others. Rising rates are a new wrinkle for the tight housing market, but prices are holding strong, meaning buyers need all the advantages they can get.
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