There's a new stat out that shows some unprecedented numbers. And the numbers reflect that home buyers entering the market today are paying 39.4% higher mortgage than they did last year at the same time.
Now, why would their mortgage go up almost 40%?
The number one reason?
Also a bit of home price increases as well. But by and large interest rates going up seven of the last eight weeks. They've gone up so fast.
So when we look at this, some of our buyers may be saying, "Hey, let's pump the brakes on me buying."
How do you respond to that? Well, the response should be a reflection on what happens if they don't pull the trigger now and they wait. We know the Fed is already planning to do six more rate hikes this year, starting right now in May.
So as we begin to roll through the rest of the year, it's highly likely these interest rates aren't gonna go lower. They're gonna go much, much higher as the Fed tries to break the back of inflation.
So with that said, does it make sense to wait? Absolutely not. It makes sense to get in the market now.
Second thing we should point out to renters, people that are renting now that are thinking about entering the market that may be hesitant is to say:
"And I want you to look at something else. How much did your rent go up last year? Did it go up 10%, some areas it's 15%, some areas it's 25%. Here's the average in the country: Rents went up about 15% last year. And it's highly likely they're gonna go up again this year, especially as more renters decide not to buy, it's gonna put more demand on the limited supply of rentals.
"So what if your rent went up another 15% and then another 15%? This is where we gotta worry. When you lock in this mortgage payment, even though it's gonna be a bit of a stretch, it's locked in for 30 years. You're gonna have a 30-year flat payment. You're not gonna have to worry about somebody raising your rent tomorrow."
So those are things we want to be pointing out to our clients, making sure that we're educating them and also educate them on what's happened in the last several decades.
We're still sitting below the average interest rate pricing for the last five decades.
Yes, it's not at the absolute low that it was. But it's still much better than the oughts, the 2010s, the 90s, the 80s, the 70s. And it's still a better interest rates than their parents and their grandparents probably had.
So point those things out, get people off the sidelines and get them in the housing market before they start paying even a higher rate tomorrow, guys go out there and crush the market.
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