For those looking to buy or sell a home, watching the market can induce anxiety.
In the last several months, interest rates have reached the highest they’ve been in decades. And, with inflation holding steady, some would-be buyers find themselves in a holding pattern yet again.
Economist and Dallas College Professor Carlos Martinez said the state of the economy today may feel unfamiliar depending on your generation.
“Unless you’re 60 years or older, this may be your first run-in with inflation,” Martinez said.
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And he said we might want to get used to where we are right now. Martinez said inflation will stick around and prices we’ve experienced over the last six months will not likely go back down. That goes for the housing market too, especially here in North Texas.
“Anything related to housing, particularly in The South, will continue to be expensive,” he said.
According to realtor.com, affordability for new homes has dropped, with just 10% of new homes selling for under $300,000 in the fourth quarter of 2022. The average interest rate for a 30-year mortgage hovers around 7% and inventory is still relatively low, shifting the market in favor of sellers.
“There is a shortage of homes on the market and people are having to pay up for it,” said Martinez. “The more people that are selling, the more options the buyers have, and they can negotiate.”
Martinez said the current state of the housing market, coupled with inflation, will have an impact for a long time from now.
“The wealth gap will continue to widen in the near term,” he said. “It’ll affect whether people decide to marry or not, whether people decide to have children.”
According to the National Association of Realtors, the national homeownership rate in 2021 was about 65%. The homeownership rate for Black Americans was about 44%. The report says 20% of Black loan applicants and 15% of Hispanic loan applicants were denied mortgages, compared to 11% of white applicants.
With rates in the last several months reaching the highest they’ve been in some 20 years, he said consumers should brace themselves.
“For as long as the Federal Reserve is not convinced that inflation is contained, rates are going to either remain where they are or go higher,” he said. “And I believe they will go higher.”
