Alarming; Is it?
One of the biggest stories in real estate this year is the continued rise in mortgage interest rates. The Federal Reserve’s efforts to combat inflation have kept rates higher than they’ve been in years, creating challenges for both buyers and sellers. With the average 30-year fixed mortgage rate hovering around 7% as of mid-2024, many buyers are finding it harder to afford homes.
Impact on Buyers:
- Higher interest rates mean higher monthly mortgage payments, leading some buyers to put their home search on hold. First-time homebuyers are especially impacted, as they often have tighter budgets.
- Adjustable-rate mortgages (ARMs) are gaining popularity again as a way for buyers to secure lower initial interest rates, though they come with the risk of rising payments in the future.
Impact on Sellers:
- Sellers are feeling the pinch, too, as higher rates have reduced buyer demand. Homes are sitting on the market longer, and price reductions are becoming more common, especially in high-priced areas.
- However, the limited housing supply is helping keep prices somewhat stable, as there’s still more demand than supply in many regions.
