Mortgage interest rates have been climbing, but did you know that they can actually be beneficial to buyers? A year ago, rates were around 3% for a 30-year fixed loan. This November 2022, they're about 7%. That makes an enormous difference in the affordability of homes and could be problematic for buyers. However, there are at least three ways that buyers can benefit from it:
1. Higher interest rates slow down price growth. From 2020 to early 2022, housing prices were climbing very fast. The demand for homes in The Triangle market was far outstripping the available supply of homes for sale. That caused home prices to climb significantly. Now, that has slowed considerably. In fact, they have leveled off quite a bit.
2. More home choices are available. Because of the slowdown and the rebalancing of the supply and demand of homes, home inventory is growing. This summer, we saw that there was about 19% to 20% higher inventory than last summer. This means you have way more choices. For the past few years, many buyers have been just making do with whatever choices are available. If they had to move to a town, and there was nothing on the market, then they'd have to buy something that was really imperfect.
"You no longer have to waive appraisals or give enormous due diligence and nonrefundable deposits."
3. Less buyer’s risk. As a result of the slowing housing market, there's less buyer risk. In the last few years, buyers have been forced to do crazy and risky things. In North Carolina, our due diligence fee is nonrefundable; sometimes, that due diligence fee to secure a home would be around $10,000 to $100,000. People waived inspections and appraisals when the home failed to appraise—as it often will when you go that far over asking price. Now, fewer people have been doing that. You no longer have to waive appraisals or give enormous due diligence and nonrefundable deposits.
The market has settled down quite a bit. If you want to contemplate buying a home now or in the future, call or email me. I’d love to be your real estate consultant.