HAMPTON ROADS, Va. (WAVY) – The Federal Reserve has raised interest rates for the sixth time this year.
This increase will have a direct impact on your wallet, making it harder to get a mortgage and pay off debt.
Even with the economy the way it is, local real estate agents say now is a good time to take a second look at the housing market if you are looking to buy a home.
The Federal Reserve hiked interest rates by three-quarters of a point. This is the fourth straight time they’ve increased rates in an effort to combat inflation, which is hovering near a 40-year high.
Even though mortgage rates going up seems like bad news for the housing market, it could cause home prices to go down which would give power back to buyers.
“The homes are still selling and transaction counts will stay the same which is good for Hampton Roads,” said Better Homes and Gardens Real Estate Native American Group Chief Marketing Officer, Barry Jenkins. “It also is good for buyers that were unable to buy a year ago because they didn’t have all that extra cash to come up with.”
Jenkins says as rates continue to increase and demand lowers, we could see the market level out. He also says they’re no longer seeing dozens of bids on homes, which is good news for buyers who are looking for less competition.
Jenkins says even though mortgage rates are higher, buyers don’t have to bring as much cash to the table. Plus, some sellers are even covering closing costs now too.
“Ultimately in Hampton Roads, we just don’t have enough homes for sale, so supply and demand means that when we did have a home listed for sale we might get 10 to 15 offers,” Jenkins said. “Now we are seeing the buyers drop off significantly so maybe instead of having 10-15 offers, we have one or two.”
However, with high inflation, Jenkins says it may be smart as a seller to lower your budget or look in a different area so your wallet isn’t stretched thin.
“When you look at over the past 12 months there haven’t been a lot of people reducing the prices of their homes,” said Jenkins. “There are sellers that are still thinking it’s 2020 or 2021 that haven’t quite adjusted to the change in the market yet and so they’re having to reevaluate.”
Mortgage rates went from 3% to 7% in less than one year, and even though rates are high, there are ways to get a better rate.
Essex Mortgage Area Manager Belinda Price says you could work to boost your credit score. This could help home buyers get a more affordable mortgage rate, increase their down payment, shop around with different lenders, or find the right loan for them.
“If you are a first-time home buyer, maybe you don’t have 20 percent to put down on a home especially now with inflation,” said Price. “So you could put down 3.5% and take an FHA mortgage and actually have a better rate than you would with a conventional mortgage.”
Price says 30-year fixed-rate mortgages are common, but there are plenty of other options that may fit your situation better. For example, the rates for 15-year loans are typically lower than 30-year loans.
She says even if you do buy a house with a higher interest rate, you can always refinance later.
Price says it’s also important to speak with a licensed mortgage professional. She says in addition to offering expertise, some companies may offer a better APR or lower closing costs.
“Work with somebody that you like to work with that is going to be able to give you different scenarios for your unique needs,” Price said.
Even though home prices are going down, Jenkins says the market is still good for sellers too because inventory is still low.
He says it’s always important to talk with an experienced agent about your best options, whether you’re buying or selling.
“There’s a nuance here that yes rates are going up but there’s an opportunity within a certain segment of the buyer pool to actually win out whereas last year they weren’t,” said Jenkins. “Cash is important to all of us and if you can save some of that and pay a little bit extra most people are going to choose to do that.”
Jenkins says if you are looking to sell, make sure your home is looking its best.
Make necessary repairs, consider staging services and use good marketing practices. All of these factors can make your home stand out from the rest to get you the best offer possible.
“Listing your home for the right price statistically is one of the best things you can do when selling your home,” said Jenkins.
Jenkins says if your home is currently on the market and you listed your home based on when the housing market was at its peak earlier this year, you may scare away buyers who can’t afford that price range anymore.