GREENSBORO, N.C. — The market value pricing, careful negotiations and strategic concessions of the 2023 housing market paint a stark contrast to the bidding wars, inspection waivers and no-time-to-think offers of 2021.
Nonetheless, local real estate agents confirm Triad-area homes are still selling fairly quickly, despite high (by modern-day standards) -- and potentially-rising -- mortgage rates. The 30-year fixed rate, as of late August, averaged 7.55%, the highest in 20 years.
The real estate landscape is putting both wishful buyers and sellers in a bind -- stay put or act now.
Financial literacy author and Debt Sucks University founder Ja'Net Adams said she doesn't anticipate much relief in the near future. "It is the goal of the federal reserve to cool down the economy, and one of the ways to do that is to cool off the housing market. That goal looks to be working, but many want to know with mortgage rates now at 7% when will the rates start to go down again."
WHY THEY WERE LOW
Adams said understanding the future requires looking at the instigators of the present. The biggest culprit was COVID-19.
"You have to remember that the reason that the rates were so low in the first place was that our economy was spiraling out of control because of a pandemic. In order to keep the United States from going into another Great Recession this country made borrowing money cheap and that included 0% interest rates," she said.
Adams explained the low rates caused the market to overheat, and buyers were gobbling up inventory for prices far surpassing appraisal prices.
WHERE WE ARE NOW
All eyes, she said, will be on the Federal Reserve's upcoming meetings, which likely will show a continued rise in mortgage rates.
"Jerome Powell (Federal Reserve chairman) has said there will be more rate hikes in the future until inflation is at 2% and not only at 2%, but they feel it is sustainable at 2%. Right now, it is at 3% down from 9%. Until it gets to 2% you can expect rates to go up again," she said.
WHERE WE ARE HEADED
While we might never see 2020 mortgage rates again, relief could come in the near future -- perhaps as soon as 2025, if Adams' predictions (based on Powell's analysis) are correct.
She recommended seeing how the market shakes out and, in the meantime, prioritizing saving and qualifying for a loan.
"My tip to you is to save up your 20% down payment over the next year so when the rates start to go down you will be ready to get into the homebuying game!"