Home Sellers Lower prices, watch for these 2 signs before buying

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After several months of soaring house prices, the real estate market finally seems to be cooling down. According to a recent Redfin report, about 1 in 5 U.S. home sellers lowered their asking prices in May, the highest number since October 2019.

However, rising interest rates have not made it easier for homebuyers as they have risen significantly since the start of 2022. If you are in the market to buy a home this summer, you may be able to also get a slightly lower price. such as a lower interest rate by carefully monitoring two key factors.

Below, Select details the two things homebuyers need to watch out for, as well as what you can do in the meantime to prepare yourself financially for buying a new home.

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2 factors to keep in mind before buying a house

It looks like the days of making dozens of offers on a home may be over. As the Federal Reserve has raised interest rates and the cost of buying a home is now 50% more expensive than a year ago, home buyers have retreated, essentially changing the entire real estate landscape.

If you’re eagerly looking for your next home, keep these two factors in mind as you do your best to perfectly plan your home purchase.

1. Inventories are on the rise

As mortgage rates have soared, consumers’ frenzy to buy a home has slowed significantly, a trend that is directly reflected in the number of active home listings.

According to a recent report from the Federal Reserve Bank of St. Louis, there were 376,018 homes listed in February 2022. In May 2022, the number rose to 516,362, an increase of 37%. Now it seems that homes are staying on the market longer and fewer offers are being made on each home.

“The increase in inventory suggests that rising rates and market conditions have started to dampen demand, which means buyers may have a little more leverage,” says Robert Heck, vice president of mortgages at Morty, an online mortgage marketplace.

Coby Herzog, a realtor in San Diego, agrees. “Listing agents are starting to respond and be helpful again now that they’re not getting more than 100 messages a day,” says Herzog, who also notices offers being acknowledged and responded to more often lately, rather than d be rejected.

When looking for a new home in a specific area, keep an eye on the total number of homes there for sale – just use the resources available in the data section of Realtor.com by searching for homes based on the area you are looking for. you wish. to buy one.

2. Interest rates are rising, but will remain volatile

Since the start of 2022, 30-year mortgage interest rates have been rising sharply. On January 6, the average interest rate for a 30-year mortgage was 3.22%, while in recent days rates have reached 5.43%. This means that, assuming there is a 20% down payment, a monthly payment for a $350,000 home just went from $1,213 to $1,577 (less taxes and insurance) in the space of about 150 days.

The combination of higher rates and record house prices has unfortunately eliminated some potential buyers from the market. But for impatient homebuyers worried about further rate hikes, Heck says, “current market indicators do not expect interest rate levels to send mortgage benchmarks above 7%,” adding that even if interest rates are higher than they once were, they are still historically low.

As for what the future holds, the Fed is on track to continue raising interest rates for the rest of the year to help weather record inflation. Heck urges consumers to remain vigilant as rates may also drop or rise quickly depending on macroeconomic factors and economic data, as well as other Fed actions.

Due to the turbulent factors, Heck says consumers are turning to mortgage products such as rate-to-be-determined (TBD) locks and floating options. According to Heck, this gives homebuyers the opportunity to “take advantage of lower rates if they lock in their mortgage and rates drop enough before they close.”

Be sure to check current interest rates with one of Select’s top mortgage lenders, which cater to the different needs of homebuyers. For example, Rocket Mortgage serves those with lower credit scores, while Chase Bank offers flexible down payment options, and PNC Bank offers flexible loan options.

Rocket Mortgage

  • Annual Percentage Rate (APR)

    Ask online for personalized rates

  • Types of loans

    Conventional Loans, FHA Loans, VA Loans, and Jumbo Loans

  • Terms

    8 to 29 years old, including 15 years old and 30 years old

  • Credit needed

    Generally requires a 620 credit score, but will consider applicants with a 580 credit score as long as other eligibility criteria are met

  • Minimum deposit

    3.5% if you go ahead with an FHA loan

hunting bank

  • Annual Percentage Rate (APR)

    Apply online for personalized rates; fixed and adjustable rate mortgages included

  • Types of loans

    Conventional Loans, FHA Loans, VA Loans, DreaMaker℠ Loans, and Jumbo Loans

  • Terms

  • Credit needed

  • Minimum deposit

    3% if you continue with a DreaMaker℠ loan

NCP Bank

  • Annual Percentage Rate (APR)

    Apply online for personalized rates; fixed and adjustable rate mortgages included

  • Types of loans

    Conventional Loans, FHA Loans, VA Loans, USDA Loans, Jumbo Loans, HELOCs, Community Loan, and Medical Professional Loan

  • Terms

  • Credit needed

  • Minimum deposit

    0% if you continue with a USDA loan

At the end of the line

Inventory and Interest rates play an important role in the housing market, but when you’re ready to buy a home, keep this in mind:

“It is extremely difficult, if not impossible, to time the market,” says Heck. “The bottom line is that everyone should consider their own circumstances, the time horizon they expect to live and own a home in, and what their long-term financial goals are in order to make a buying decision.”

Before you start bidding on homes, remember to do your due diligence on your personal finances – raise your credit score as high as possible, make sure your monthly budget is under control, bolster your emergency fund in a high-yield savings account with American Express or SoFi, and don’t neglect to set aside money for your retirement.

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Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

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