Florida, St Cloud, Harmony, planned community, new single family home available sign. (Photo by: Jeff Greenberg/Education Images/Universal Images Group via Getty Images)
Mortgage rates, which have hit 8% on Oct. 18, are the major contributing factor to the increase in home prices. This is a 5% increase since last year.
“In a homebuyer’s ideal world, rising mortgage rates would push demand and home prices down enough to make up for high-interest payments. But that’s not what’s happening now: Although new listings are ticking up slightly, inventory is still near record lows as homeowners hang onto their low mortgage rates–and that’s propping up prices,” said Redfin Economics Research Lead Chen Zhao.”
Zhao encourages prospective homebuyers to look for less expensive options such as condos and townhouses or consider moving to a suburb or a more affordable part of the country.
“Renting is more affordable than borrowing to buy a home in most metro areas,” Daryl Fairweather, Redfin’s chief economist, told Fortune.
According to Redfin, only four major markets are less expensive to buy than to rent: Detroit, Philadelphia, Cleveland and Houston.
Source: Black Enterprise