America Has a Buyers’ Market They Can’t Afford
Summary
Mortgage rates in the U.S. have gone above 7 percent again, making it harder for many people to afford homes. This has created a situation where buyers who can get a mortgage have more power to negotiate, but the overall number of buyers is smaller because many cannot afford the higher costs.Key Facts
- Mortgage rates rose above 7 percent, increasing the cost of borrowing money to buy homes.
- Higher rates have reduced how much most households can borrow comfortably.
- There are fewer buyers competing for homes, which gives those buyers more power to negotiate prices and terms.
- Despite fewer buyers, home prices have not dropped much because many sellers have low-rate mortgages and can wait to sell.
- In August, there were about 58 percent more sellers than buyers, a record gap since 2013.
- Buyers may get sellers to pay some costs or accept lower offers, but high mortgage rates still make monthly payments expensive.
- The housing market shows a paradox: it is easier to negotiate as a buyer, but harder for many people to afford becoming buyers.
- If mortgage rates stay high, demand may weaken further, possibly leading to bigger price cuts later on.
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