This was a difficult task for potential homebuyers. And those who want to sell their homes don’t have it so easy either.
Mortgage lenders charge exorbitant rates. It’s true that today’s rates are not the highest they have ever been. However, these are the highest rates we have seen in over two decades.
Due to high rates, buyers found it difficult to afford a home. It was difficult for the current homeowners to make any move.
After all, many people signed mortgages or refinanced to interest rates in the 3% range in 2020 and 2021. Who wants to trade that rate for a rate around 8%?
Unfortunately, the housing market is unlikely to improve for buyers in November. Here are some things to expect.
1. Mortgage rates will remain high
At the end of October, the average interest rate on 30-year mortgages was about 8%, according to Freddie Mac. In November, rates may rise even more.
More: Check out our picks for the best mortgage lenders
Even if that doesn’t happen, it’s unlikely that rates will go down. And that could keep many buyers from participating in the market and prevent potential sellers from listing their homes for sale.
For context, the principal and interest payments on a $200,000, 30-year mortgage at 3% interest are $843. The principal and interest on the same loan at 8% is $1,468. It’s not twice as much, but much more.
2. House prices will remain high
The National Association of Realtors (NAR) reports that the average existing home sold for $394,300 in September. This is an increase of 2.8% compared to the previous year.
Home prices may not increase significantly in November as buyer activity tends to slow towards the end of the year. If there is no increase in demand, we may not see house prices increase.
But house prices won’t fall either. So buyers shouldn’t expect much relief.
3. Housing inventories will remain low
No one wants to sell their home right now unless they can somehow raise the proceeds and buy a replacement home for cash. Buyers are simply put off by today’s mortgage rates. For this reason, it is unlikely that more homes will hit the market in November.
Meanwhile, according to NAR, there were just 3.4 months of home supply available on the market at the end of September. It usually takes four to six months to have enough inventory to meet buyer demand. In fact, it is the lack of inventory that is keeping home prices high at a time when they might be expected to fall due to higher mortgage rates.
Hard times for the housing market
To sum up, November is a difficult month for shopping. And while sellers may benefit from a lack of competition, they are in the same boat as buyers when it comes to high interest rates on new home loans.
If you’re going to buy a home in November anyway, crunch the numbers carefully and try to keep your total housing costs under 30% of your take-home income (your paycheck less deductions). This 30% should include your mortgage payment, property taxes, homeowner’s insurance and HOA fees, if applicable – basically any recurring, predictable expenses associated with owning a home.
Crossing this line is risky. Incurring higher housing costs may put you at risk of falling behind on home bills or other necessary expenses. So if you can’t stick to this limit, it may be best to delay purchasing a home until market conditions are more favorable.
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