Mortgage Payments: Too High to Buy a Home?
Record high mortgage payments are preventing many people from buying homes, and causing prices to fall in some areas.
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With mortgage demand at its lowest level in 25 years, some experts believe that the housing market decline will hit a number of regions particularly hard. They predict that prices could fall by as much as 20% in areas where the pandemic has caused affordability to plunge, even if the overall housing market remains stable. This could have a serious impact on the economy, as well as on the lives of people who have invested in these areas.
![Mortgage payments have climbed to a record high—sidelining buyers and already pushing prices down in ... [+] some major markets. ASSOCIATED PRESS](/uploaded_images/a8c27b1d9ac8ee5ce7b8d0382b20b576_1664982429.jpg)
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Lotfi Karoui, Goldman's chief credit strategist, believes that national home prices will likely avoid a correction next year. However, he does expect that 39% of metropolitan areas will experience price declines. Despite this, Karoui remains optimistic about the future of the housing market.
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It is important to remember that much of the housing market data being reported are based on home purchases that were agreed to a month or more ago, when mortgage rates were a point and a half lower, says Redfin economist Taylor Marr. Sellers should anticipate that buyers are unwilling or unable to pay a price similar to what their neighbor's home sold for a month ago.
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There is a possibility that housing prices in some areas may not correct themselves, but rather stay the same or even increase. This is due to a lack of new construction in certain areas, and Joshi notes that many markets in the Northeast have this issue. Homeowners in these areas are likely to stay put rather than sell their homes at lower prices.
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As mortgage rates continue to rise, home buyers are finding themselves with less space to call their own. According to a recent report from Forbes, the average home buyer is getting 9% less space than they would have last year.
The housing market is showing early signs of a potential recession, as new home sales unexpectedly surge. This volatility could be a sign that the economy is beginning to cool off, and it's something that we should all be paying attention to.
