Some buyers waited for bargain homes that appeared after the Great Recession – but to counter higher mortgage rates, year-to-year prices have to drop 45%.
CHICAGO – Despite slowing or falling home prices, rising mortgage rates are responsible for many first-time buyers still finding homes unaffordable.
Nationwide, a median mortgage payment is now about 77% higher than it was a year ago, mainly because of higher rates. Assuming those rates don’t change, home prices would have to dive 45% for monthly mortgage payments to return to year-ago levels.
On the other hand, if average mortgage rates rise another 1%, home prices would have to be down about 50% year-to-year for monthly payments to be equal.
“With rates … not likely to return to those 3% levels anytime soon, even a 10% decline in prices is not going to offer much of a bargain,” says Realtor.com senior economist George Ratiu. “The only way I see mortgage rates stopping their upward trajectory is if the economy dives into a severe recession.”
Source: Realtor.com (11/07/22) Trapasso, Clare
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