Timing has become everything in the home market as volatile mortgage rates have turned upward for the past week or two.
Rates that were touching 6% are now moving close to 7%, putting many buyers back on the sidelines. Mortgage News Daily put the rate at 6.78% on Friday. The rising rate comes from recent inflation news.
Los Angeles Redfin agent Justin Vold said in prepared remarks that well-priced homes are still getting multiple offers, but that he did notice buyers making fewer offers this week as interest rates crept back up.
“Buyers have been hypersensitive to rates since the start of the pandemic,” Vold said. “In today’s topsy-turvy market, I’m advising people to take a step back from day-to-day rate fluctuations and consider their long-term needs.
“If someone is planning to stay in a home for many years and they can afford today’s interest rates, now is a perfectly good time to buy because there’s relatively little competition.”
Vold said it may not be the right time for someone who’s only looking for a short-term home and/or can barely afford to pay their mortgage with 6% or 7% interest.
“Buyers need to be ready to keep the original payment for all 30 years of their loan because although rates will inevitably come down, we don’t know when that’ll happen,” he said. “When the opportunity to refinance does come around, shaving off part of the monthly payment will be a bonus.”
Redfin Economics Research Lead Chen Zhao said in prepared remarks that the volatility is a reminder that the housing market recovery will remain touch-and-go until we see inflation and the overall economy improve for a longer duration.
Some 85% of mortgage holders have a rate far below 6% and many are happy to hold onto it, according to Redfin.
The median asking price of newly listed homes was $378,118, up 1.2% year over year, the smallest increase since May 2020.