After big run-ups in home prices the past three years, a lot of potential home buyers were hoping for a big drop in mortgage rates or at least some lower prices.
So far they are not seeing either one, but there is some hope as we head into summer.
Home prices reached another all-time high nationwide this spring, according to the latest Case-Shiller Home Price Index. It shows prices up 6.5% year-to-year with prices rising in all 20 major markets it surveyed.
Like so many home buyers right now, Casey Crowley has been frustrated.
“Very frustrating,” Crowley said. “I really couldn’t find anything that I was willing to pay more than what they were asking.”
Worse, these higher prices come at the same time mortgage rates remain stuck around 7%.
Rates are just now beginning to fall, with the 30-year mortgage dropping slightly below 7% on June 12 for the first time in 3 months. It's due to good inflation news this past week, indicating an end to Fed rate hikes.
But that one-two punch of high prices and high rates is frustrating many buyers.
Realtor Susan Huff of Huff Realty said many of her clients were hoping prices would ease this year due to high rates — but that hasn't happened.
CNN says the combination of high prices and high mortgage rates have the housing market locked by a “golden handcuff.”
The problem is that millions of current owners don’t want to move, because they bought their homes at much lower prices and are paying much lower interest rates — so they are "handcuffed" to their homes.
Should you buy now, or wait?
Many buyers are debating whether to wait another year for lower rates.
But realtors like Susan Huff warn that much lower rates (in the 5% range) could mean the return of 2022's bidding wars, and even higher prices.
“When rates do drop,” Huff said, “you’ll see an influx of people are going to try to outbid each other, prices are going to escalate even higher and buyers will be shut out again.”
So, she says buy now if you find the home of your dreams, even with rates still high.
She says you can refinance when in a year or two, if rates drop a point or more, so you don’t waste your money.
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