Could rising interest rates cool the overheated real estate market?
According to Freddie Mac, 30-year fixed-rate mortgages averaged above 5% in April for the first time in more than a decade.
SACRAMENTO, Calif. — Home prices continued to climb in the first quarter of 2022, but mortgage rates are climbing rapidly.
The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, announced that 30-year fixed-rate mortgages averaged above 5% in April for the first time in more than a decade.
Traditionally, higher interest rates have ushered in a buyer’s market, but house prices have continued to rise.
“If you want to sell, now is the time. We are at the top of the market. We don’t expect it to continue at the same pace,” said Steven Bloom, head of Realty One Group Complete.
Bloom said it was still a hot seller’s market, but he was watching interest rates closely.
The Sacramento Valuation Blog writes about a “temperature shift” entering the market. It shows more listings hitting the market this month, but still not enough at around three weeks supply.
The blog also points out that paying above the list price has started to “soften up”, although buyers are still paying more than 3% above the asking price.
Buyers in this market should be pre-qualified, Bloom said.
“Know exactly what you can afford at today’s interest rate, then start looking at homes slightly below,” Bloom said, warning that mortgage rates are likely to rise further this year.
Time will tell if this will dampen the rise in house prices, but buyers will certainly pay more interest.
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