For the first time in more than a decade, mortgage rates in the U.S. have reached an average of 5%.
The report Thursday from Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, states 30-year fixed-rate mortgage is up from last week when it averaged 4.72%.
“As Americans contend with historically high inflation, the combination of rising mortgage rates, elevated home prices and tight inventory are making the pursuit of homeownership the most expensive in a generation,” Freddie Mac’s Chief Economist Sam Khater stated in a press release.
TOUGH TIME FOR ANYONE LOOKING TO BUY A HOME
Vicki Mladenovic and her husband have been living in an apartment in Grapevine since November 2020. In August 2020, they sold their Southlake home and downsized after Mladenovic’s job was cut from her company during the pandemic.
“It was one of those, I’m two to three years shy of when I was going to retire. What do we do? I’m the main breadwinner,” she said. “It [home] wasn’t necessary for two people. I thought, our best financial decision was to sell the home and then we could rent until they could find a place they could retire.”
She did not expect they would still be shopping for a home a year and a half later. So far, they have put offers on three homes including one outside of Texas.
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“You start to realize, we’re going to have to jump into this game and pay more than the home should be valued at. So, we offered $20,000 over and that one may have had 35 offers,” she said. “It is frustrating to know when you’re in your last 15-20 years, if you’re lucky, of your life that you’re having to navigate these financial decisions that you’re making.”
"A HOUSING SHORTAGE, NOT A BUBBLE"
Chandler Crouch, a broker and owner of Chandler Crouch Realtors, has been working in North Texas real estate for 20 years.
“I’ve seen several different market cycles, up cycles and down cycles. I’ve never seen anything like we’re seeing today,” Crouch said. “What I’m seeing today is a housing shortage. We’re not in a bubble.”
With a high demand and lower supply of homes, Crouch said it can be a challenging time for buyers.
“If you don’t have cash to help at least supplement the amount of money you’re financing to buy a house, it’s difficult. It’s difficult for buyers that don’t have a lot of cash on hand, because there’s so much competition. You have to do what it takes and win to beat out other buyers in the marketplace,” he explained. “As unfortunate as it sounds to see interest rates rising, I’m hopeful that allows the market to correct a little bit because we’re in extreme times right now and it needs to balance out a little. The insanity we’re in can’t sustain for much longer, I don’t think.”
While it can be a difficult time for buyers, Crouch said it is not entirely impossible.
“Pay a little more if you have to. Buy a little more smaller if you have to, but go ahead and take that step because finances are not everything,” he said. “What might be true for the North Texas area or the entire country may not be true for the subdivision that you want to buy or sell a house in. So, it’s really important to look at your specific goals and be open-minded and be optimistic.”
KEEP YOUR OPTIONS OPEN
Mladenovic said she and her husband are keeping their options open.
“I feel like a college student. I can live anywhere in the U.S., but where am I going to go? And to be able to financially afford to survive?” she said. ‘We’ll survive. We have no options. You got to go forward.”
NBC News reports home prices are up about 15% over the past year and as much as 30% in some cities. Available homes had been in short supply even before the coronavirus pandemic started just over two years ago.