Interest rates are at a 15-year high, which means home loans are going to cost more than they did a few months ago.
Some fear this is a sign that the market is heading for a crash. However, experts said that is not necessarily the case.
Experts said people shouldn’t be afraid to buy a home because the market isn’t where it was in 2008.
“A lot of people are worried about the market crashing in 8s, 9s and 10s. It was a crazy time,” said Jessica Scott, associate broker at KW Advantage.
She said that in 2008 there were many more homes on the market due to foreclosures and new construction. This meant buyers could bid well below the asking price.
Over the past year, construction has slowed, meaning there are fewer homes for sale compared to 2008 just before the crash.
“Prices were skyrocketing because we didn’t have enough inventory and then you have the sellers making tons of money on their property, but the buyers were really overspending,” Scott said.
All this inflation and interest rate uncertainty has people worried about what will happen next.
“A big part of the concern is, ‘How much more do we have to pay?’ This market equilibrium is actually beneficial to the buyer because they are no longer overpaying for homes,” Scott said.
Michael Stokes of Cityscape Home Mortgage said the good news is that banks are finding creative ways to help people buy homes, even at 6.5% interest rates.
“We have a 2-to-1 buy. So basically it’s a way to lower the mortgage payment for buyers for the first two years and that’s a significant difference,” Stokes said.
Stokes said the first thing people wanting to buy a home should do is talk to a loan officer about all the different options.