Homeowner Marie Cantu, 35, lives just outside of Seattle, and has been looking to buy a single-family home outside of Boston to be closer to her family.
Higher rates make housing more expensive — and less affordable — for aspiring homeowners. They have also been a major factor in keeping would-be home sellers out of the housing market. But the house search recently hit a major speed bump. Cantu told MarketWatch that she put an offer in a couple of weeks ago on a home — the only time she got close to buying a home she really wanted — she was outbid. “It was listed at $699,000,” Cantu said, and she offered $715,000. “And someone outbid us,” she said.
“‘I don’t think people should expect mortgage rates to go back to the 3% range. We have short-term memories when it comes to where rates were before COVID.’” For those who are keen to sell their home or buy three years after a pandemic pushed rates to record-low levels, they should temper their expectations. “We’re not going to see mortgage rates back down to 3% ever in our lifetimes — it’s simply not in the cards,” Lisa Sturtevant, chief economist at Bright MLS, told MarketWatch. “Unless something catastrophic happened again.”
A healthy real-estate market would look much like the U.S. housing market between 2015 and 2019, she added, when rates were between 3% and 5%. “That was at a point when rates were low enough that people were like, ‘It’s a good deal. I can afford this,’” Cohn explained. What mortgage rate will encourage homeowners to sell — and buy again? On the flip side, what will it take for homeowners — who are not going to buy another house with all-cash — to sell their homes and for the number of new listings to increase?
Sturtevant noted that homes — like Cantu’s home in the Seattle metro area — have appreciated considerably in value over the last few years. Homeowners can, therefore, use that equity if they choose to sell.