How rising mortgage rates affect the housing market
That makes it a good time to be a seller – assuming you don’t need to buy. Fed Governor Christopher J. Waller saw this.
“I sold my house yesterday in St. Louis to a cash buyer, with no inspection,” Mr. Waller said during a panel discussion on Monday. “But I’m trying to buy a house in DC, and now I’m on the other side, saying, ‘This is crazy.'”
He noted that the sharp rise in mortgage rates in recent months should have an effect on what happens with housing.
The recent absence of new buildings was not for lack of interest. Millennials, in their late 20s to early 40s, are in their prime home buying years. Their desire to buy homes and start families has been met with limited supply, which has driven up prices.
Closures in the early months of the pandemic slowed home construction, but starts have been booming lately. Completions of new houses remain weak, however, as the tight labor market and supply chain disruptions leave homebuilders scrambling for lumber, dishwashers, garage doors — and workers.
What is Inflation? Inflation is a loss of purchasing power over time, which means your dollar won’t go as far tomorrow as it did today. It is usually expressed as the annual change in prices of common goods and services such as food, furniture, clothing, transport and toys.
Prices, lack of supply, the feeling that the only way to win a bidding war is to give up contingencies and inspections: all of this has exhausted buyers like Armando Villanueva, a 34-year-old accountant in Whittier, California. To move from an 800-square-foot, two-bedroom home to a larger home for future children, Mr. Villanueva and his wife spent the final months of 2021 making offer after offer — and losing each time. They stretched their budget from $700,000 to $800,000. They removed loan contingencies in hopes of being more competitive. Through two dozen offers, it still wasn’t enough.
Finally, as the year drew to a close, they offered $825,000 on a house listed at $750,000. It cost nearly $1 million.