Did The Economic Impacts From The Housing Market Just Get Worse?

A lot has changed within the last couple of years within the housing market, and not all of it has been great for homebuyers. If you've been watching home prices and the overall trends within the housing market to try to find the best time to buy, you're not alone. Lots of people are interested in keeping updated with the latest in the industry. And if you're just learning about what's to come soon with the housing market, you'll love to get a quick synopsis of the past several months.

Home Mortgage Rates Are On the Rise

One of the biggest hurdles that homebuyers today will have to overcome is the interest rates on mortgage loans, which have been rising swiftly since last December when they were at 3.11%. As of late May, mortgage rates had hit 4.42%, but as of June 3rd, the rates hit 4.67%.

With these rates, some potential homebuyers will no longer qualify for a loan because their debt-to-income ratio won't meet banks' standards. Additionally, even homebuyers who still meet the qualifications could shy away from buying because of the additional costs.

Is a Crash On the Horizon?

There are a lot of people who are interested in getting a house, but if mortgage rates make buying a house unattainable or undesirable, it's reasonable to think that a crash is on the horizon. In reality, enough people will likely back off from buying a house to help the housing market cool down, leading to lower home asking prices, but it won't cause the market to crash. This will also help the housing inventory throughout the country to rise.

Why Housing Sale Rates Have Stayed Strong Until Now

One of the main reasons that houses have continued to sell well for so long is that many buyers in months as late as March were actually buying with interest rates that were locked in during January, so buyers were able to get houses without having to pay as much for the interest. In the coming months of June, July, and onward, the rising interest rates are less of a motivator to buy before rates rise even further and more of a deterrent as they rise to near 5%. This can even be seen as a good thing for the federal reserve because part of the goal with the rise in interest rates is to help steady the housing market and allow the housing inventory to rebound so that house prices are once again more affordable.

If you're wondering whether the economic shock of rising interest rates actually made things worse for homebuyers, in many ways you could say that it did. But the upside to this is that it's going to be better for the housing market and homebuyers in the long run because home prices should begin to stabilize, making buying a home more possible for more people in the future. A real estate agent in Dallas can further help you navigate the next several months if you're in the market to buy a new house or want to sell your current home.