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Rising Mortgage Rates and Their Impact on the Housing Market

Updated: Aug 27, 2023

It's a fact: we're seeing the highest mortgage rates in over 20 years. Whether you're in Colorado, Georgia, or any other state, this surge is reshaping the housing landscape. What does this mean for buyers, sellers, and the industry at large? Let's dive in.


1. Rising Mortgage Rates: The Buyer's Dilemma

  • Mortgage rates have soared due to the Federal Reserve's recent rate increases.

  • Existing home sales in July plunged by almost 17% compared to the previous year.

  • A 30-year home loan now carries an interest rate of 7.23%, a peak not seen since 2001.

  • For a loan amounting to $300,000, this translates to a monthly payment increase of roughly $330 compared to last year.

  • With steeper costs, many potential buyers are choosing to wait and see.

2. The Homeowner's Catch-22

  • Homeowners who secured homes with lower rates in recent times face a dilemma.

  • Selling means leaving behind those favorable rates for the current high ones.

  • This results in fewer homes on the market, with around 15% less listed this July compared to last year.

3. The State of Existing Home Sales

  • Despite the dip in sales, home prices remain high.

  • In July, the average home sold for about $407,000, marking a 1.9% increase from last year.

  • More homes are selling above their listed price, intensifying bidding wars and competition among buyers.

4. The Appeal of New Homes

  • Limited options in existing homes have shifted attention to new constructions.

  • July witnessed a remarkable 31% jump in new home sales from the year before.

  • While the prices of new homes rose a bit last month, they've generally been dropping since the beginning of the year, with nearly 25% of builders reducing prices to drive sales.

5. A Shift in Housing Preferences

  • To keep homes affordable, builders are now focusing on slightly smaller designs.

  • This is a change from the early days of the pandemic when spacious homes were in vogue.

  • The average size has shrunk from 2,350 sq ft in 2021 to around 2,200 sq ft currently.

  • Condos and townhouses are also gaining traction due to their affordability and increasing value.

Conclusion:

The housing market is under the influence of rising interest rates, changing preferences, and evolving buyer behavior. Especially in places like Colorado and Georgia, where inventories are low and interest rates have taken a leap, buyers and those looking to refinance need to be well-informed and strategic.


Take the Next Step with Fred Gallegos:

Drawing from my in-depth understanding of financial literacy education and the mortgage lending realm, I am equipped to guide you through these changes. If you're thinking about entering this market or seeking advice, lean on my expertise. Together, we'll chart the best course for your housing journey.

Contact me today!


📞 Colorado: 970-549-1290

📞 Georgia: 404-985-9980

🌐 Website: www.VAWithFred.com

📅 Schedule a Chat: Let's Connect

📝 Begin Your Application: Apply Now


 

Disclaimer: Fred Gallegos is a licensed loan originator specializing in the states of Colorado and Georgia and operates this blog as a private individual. While he endeavors to provide the most accurate and up-to-date information, this should not replace official guidelines and regulations.

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