Market Update October 9th, 2023

Mortgage rates jumped yet again last week. And these escalating mortgage rates are not just numbers on paper; they translate to painfully higher monthly payments for homeowners. As these rates soar, the amount that potential buyers would have to allocate towards mortgage payments increases substantially, squeezing their personal budgets. This financial strain is causing many prospective homeowners to reconsider the timing of their purchase.

For many, the dream of owning a home is being put on hold, as the immediate financial implications become too burdensome. As a result, the real estate market is witnessing a cooling effect with lower demand. This decline isn't solely due to buyers being priced out, but also because many are strategically choosing to wait. They hope that by postponing their purchase, they might capitalize on any potential future decrease in rates. As of now though the way bond yields are, not looking likely.

While adjustable-rate mortgages (ARMs) seem to be a more attractive option due to their initially lower rates, they come with their own set of risks, especially if rates continue to rise in the long term. Consequently, even with the availability of ARMs, the housing market is experiencing a slowdown.

In summary, the surge in mortgage rates is having real-world consequences, pushing potential buyers to either delay their home purchase or explore other financing options. This shift in buyer behavior is causing a noticeable decrease in demand within the housing market.

Still no signs of forced selling, the one main leg holding up home prices respectfully. Many sellers still choosing not to give up their sub 3% mortgage, but will be interesting if home prices continue to fall if sellers are still willing to choose a lower mortgage payment for a house they are not still in love with, for cashing out on their equity.

“Perfection is not attainable. But if we chase perfection we can catch excellence.”
—Vince Lombardi

Have a great week everyone!