It’s no secret that the recent rate hikes have had a huge impact on the housing market. In just one year, for the same house, mortgage prices have gone up by 70%, just as they should. Despite this, prices and inventories still remain the same, leaving buyers with little choice but to pay $25K over asking and compete with multiple offers.
So why hasn’t the market shifted? We can start with the fact that a large percentage of people have mortgages at or below 4%. This means that unless a major life event forces them to, they’re unlikely to sell. But there are other factors in play, too. Unemployment is incredibly low, allowing people to find remote work, and many are supplementing their incomes with side hustles. On top of this, many are willing to be house poor in order to buy the house and location they want right now, banking on the hope that they can refinance.
All of this has made it difficult for first-time homebuyers who don’t want to be house poor, as it’s hard to find a house in the city or suburbs. But with some smart decisions, it can still be done.