My earnest advice: If you’ve sat on the home buying sidelines for the last 5 years for various reasons, why on Earth would you buy now? Because for the next 3 years, TODAY will look like the ‘good old days’. Armed with historically low interest rates for the past few years, most home OWNERS are staying put. They see no reason to sell and face a new mortgage rate in the 5’s… That means even fewer homes will be on the market, and the Fed WILL raise rates 3 times this year. Those rates will push you out of the market if you are on the ropes right now. Fortune Magazine explained:
Historically speaking, the inflation fighting playbook is particularly hard-felt in the housing market, where spiking mortgage rates can quickly price out homebuyers. That’s already starting to happen. On Thursday, the average 30-year fixed mortgage rate hit 5.11%—up from 3.11% in December. A borrower who took out a $500,000 mortgage at a 3.11% rate would owe $2,138 per month. At a 5.11% rate, that monthly payment on a 30-year mortgage spikes to $2,718.
While the swift move up in mortgage rates is undoubtedly putting downward pressure on the housing market, it doesn’t mean home prices are about to crash. In fact, every major real estate firm with a publicly released forecast model, including Fannie Mae and Zillow, still predicts home prices will climb further this year.
That said, industry insiders tell Fortune there’s increasingly a chance that the economic shock caused by soaring mortgage rates could see home values fall in some overpriced housing markets.
To better understand which regional housing markets might see a price decline, Fortune reached out to CoreLogic. The California-based real estate research company provided us with its assessment of close to 400 metropolitan statistical areas.