Looking Back: The Current Housing Market is All Too Familiar

Blog posted On November 08, 2022

This isn’t the first time the housing market has been here. In the late 1970s, inflation climbed to 14% and home prices surged 14%. It was a seller’s market; buyers were taking what they could get. Eventually, the Federal Reserve raised interest rates to calm down the economy. By 1980, mortgage rates had soared to 15%. Buyer competition cooled, home prices declined, and more options became available on the market. What was once a seller’s market quickly turned in favor of the buyers. Flash forward 42 years, and you’ll find a market in very similar conditions.

Current housing market conditions

While inflation isn’t near 14%, it has climbed to a 40-year high near 8%. Consequently, the Federal Reserve has hiked the benchmark interest rate at a historically fast pace. Current mortgage rates are trending around 7%, and home buyers are searching for light at the end of the tunnel.

Where is the housing market headed?

Many are wondering when the pressure of high rates will ease. Unfortunately, interest rates and inflation tend to go hand-in-hand. When inflation rises, rates generally rise. And when inflation begins to fall – or at least peak – the bond market (which affects mortgage rates) could begin to relax. Prices should continue to cool, and more options should become increasingly available. Seasonal cooling is still expected, with the general market slowing down during the winter months. But right now, buyers are still scoring sweet deals including incentives, buydowns, and more.

How home buyers can save money in the current market

While mortgage rates are trending high, there are many other positives in the market for home buyers, including programs that can help them save despite rates.

Mortgage Payment Buydown – Sellers, builders, Realtors, or buyers themselves can pay for a buydown of their mortgage rate for up to three years.

All In One LoanTM A loan less dependent on rates can help you save tens of thousands on interest.

Adjustable-Rate Mortgages (ARMs) – ARMs generally start at a lower introductory rate than most fixed-rate mortgages.

No matter the current market, we have plenty of ways to help you home. Explore more options when you contact us!


Sources: Money, Mortgage News Daily