With the national inflation rate climbing faster than we have seen in over 50 years, the Federal Reserve recently made efforts to curb the upward pace by raising interest rates for the first time in over 2 years. Where this is designed as a positive move to help inflation woes within the next year, it has immediately impacted those who wish to borrow money, namely prospective homebuyers, in a very negative way.
According to Freddie Mac, the rise in mortgage rates is the fastest three-month increase in over 20 years.
Interest rates rose from 2.67 percent to 5.08 percent in recent weeks. What this means essentially is the median average price of a home in the US has risen from $309,200 to $357,300 in just 14 months.
For homebuyers this nearly doubling of interest rates will make their monthly payments significantly higher. So should you wait to buy??
Taking a look at the real estate market in and around the Atlanta area over the past year according to FMLS (the primary database used by Realtors), median prices have risen from $280,000 in January 2021 to $368,000 in late March 2022.
Average days on market from January 2021 until late March 2022 went from 12 to 7.
Sales as reported to FMLS from the same periods went from 6,659 to 9,272.
Looking at this data, there has actually been a pretty significant increase in sales volume as more homes have been slowly coming on the market and new builds are starting to pop up here and there. Prices are expected to still rise, but with higher interest rates, mortgage applications have plummeted therefore there will be much less competition. This will theoretically keep home prices from skyrocketing into bubble territory and also dramatically extinguish the brutal bidding wars of the past, elevating your offer to the top because your rivalry just left the field.
And as someone who has held a real estate license for over 20 years, and whose mother and grandmother were also licensed Realtors, 5% is STILL an incredibly low interest rate for a
mortgage.
The answer to the question I posed above is yours alone to make, but hopefully you now have some beneficial information to assist you in the process.
By Holly A. Morris, Realtor
The Meridian Real Estate Group