Experts weigh in and we’ve curated their input
While mortgage rates fluctuate in the 5% range (nearly twice what they were one year ago) speculation abounds as to how this will impact the housing market. Will buyers back off? Are sellers in for a disappointing summer?
Everyone appears to have an opinion, but most seem to agree that we’re witnessing a cooldown that’s bound to have an impact for those looking to buy or sell a home this year.
Here’s what experts are saying about the effect of the great housing-market cooldown.
More buyers are being shut out of the market
Jeff Tucker, a senior economist at Zillow, told The Washington Post:
“The market is cooling off, but that cooling has happened on the backs of buyers getting discouraged, on buyers being forced out of the market. People who thought they would join the party are being greeted by absolute carnage as far as affordability right now.”
Perhaps buyers should wait while sellers should sell
Mark Zandi, chief economist for Moody’s Analytics, told Bloomberg that this would be his advice.
“It’s a particularly bad time to buy right now. If I were a buyer, I’d be waiting. Affordability has been crushed, demand is weakening rapidly, and listings are rising. I expect house prices to go flat in some of the most active markets and for some to come down…Selling sooner rather than later makes sense. I’d bite the bullet, mark down my expectations a little bit, and sell.”
Sellers need to adjust their expectations
Mark Fleming, chief economist at First American Financial Corporation, told MarketWatch that sellers should expect it to take longer than before to sell their home.
“Mere days on the market were never normal. In fact, the old adage used to be that sellers should typically expect their home may take up to 3 months on the market to sell. Of course, we’re a long way from that yet, but sellers should expect it to take longer to sell their home. For buyers, expect less fierce competition to buy a home.”
The whole situation means more inventory will sit on the market
Realtor.com Chief Economist Danielle Hale told ABC News that ultimately buyers in this market will have more options – even if it does come at a cost.
“If you have more flexibility in your timeline, you may be able to wait it out and negotiate with sellers, but keep in mind that mortgage rates are also still climbing so you may end up with a higher mortgage rate if it takes you longer to find a home.”
The rental market may see a spike
Ali Wolf, chief economist for housing data firm Zonda, told The Hill that unconvinced buyers may cause a spike in the rental market.
“The higher cost of homeownership is pricing some potential buyers out of the market but is also changing the math in the rent-versus-own discussion. Many prospective buyers are choosing to sit on the sidelines to wait and see how both the economy and housing market progress before making the decision to purchase.”