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Buying A Home For The Holidays May Still Be A Bridge Too Far For Many Homebuyers

Buying A Home For The Holidays May Still Be A Bridge Too Far For Many Homebuyers

Apart from the 2008 bubble/recession when millions of homes went into foreclosure, whether it was home prices, the economy, or interest rates, history has been more or less kind to homebuyers. Even then you could buy a foreclosed home for peanuts and bet on the future to change things up.

The behemoths holding both homebuyers back now, however (inflation, interest rates, and home prices) will have defined the 2022 real estate snapshot, however. Unfortunately, experts are not expecting a big change any time soon. “For would-be buyers who have had their home searches foiled or delayed by soaring mortgage interest rates, the housing market is likely to get worse before it gets better,” says Realtor.com’s Clare Trapasso.

“Mortgage rates are expected to keep rising after new indicators showed that inflation rose 7.7% year over year in October, according to a Bureau of Labor Statistics report released on Thursday. The U.S. Federal Reserve has been hiking its interest rates in an all-out war against stubbornly high inflation, leading to the surge in mortgage rates.”

She goes on to say that the hikes appear to be making a dent as inflation showed a downward trend from 8.2% year over year in September, but added that it was still high enough that the Fed is likely to continue to shock the economy with more rate hikes that are pushing the nation to the brink of a recession. Of course, it’s all related.

“When the Fed raises its rates, mortgage rates typically follow—much to the displeasure of homebuyers,” says Trapasso. “Those higher mortgage rates have priced many first-time buyers out of homeownership, while others have been forced to drastically reduce their budgets and expectations.”

Experts also say the drop may not be enough to assuage concerns about where the economy as well as rates are ultimately headed. While rate hikes begin to slow inflation, it’s likely the Fed will continue on its path of continued rate increases. So read it and weep: Homebuyers today are paying about 81% more each month than they did a year ago, taking into account year-over-year October median home list prices as well as average mortgage rates in the second week of November this year and last for 30-year fixed-rate loans.

The desire for homeownership? Oh, it’s still there. But purchase activity is still well below last year’s levels when rates were lower. So buyers are defining the virtues of patience. a statement. “Many prospective buyers are waiting for the volatility in mortgage rates to subside, as well as for a clearer picture of the economic outlook.” If inflation continues slowing, however, at some point the Fed will stop raising its rates, followed by falling mortgage rates as well.

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