As mortgage rates hit an average of 4.6% on a fixed 30-year mortgage, experts are concerned that the rise in rates will impact overall sales of properties.
Still, demand for homes remains historically very strong as January home sale prices increased by 19% year-over-year, according to CoreLogic. They anticipate the numbers for February for New Jersey to be published on the 23rd and 24th, but many are expecting sales to reflect inventory shortages and high mortgage rates.
The problem with this imbalanced market is that it is clearly shutting out many first-time home buyers. Asking prices appear to be easing a bit. This, according to realtor.com, reflects the first time in months sellers have been willing to accommodate the higher cost for home purchases.
As is stated in earlier Counsellors Title blogs, rental costs are also increasing at a proportionate rate, making it difficult overall for the Millennial market of 45 million as they enter the eary stages of home formation.
First-time home buyers are having to scrutinize not only interest rates and the price of a home, but also what they can actually afford to pay monthly. The uncertainty of the economy forces first-time buyers to allow a greater cash cushion in the event of unexpected expenses. First time home buyers have to consider that the house they buy, today they may be in for the next 5 to 10 years, so there has to be some forthought given to every decision. One way that first-time buyers can cut down on the cost is to avoid private mortgage insurance. They can avoid such cost by being able to put down a 20% down payment.
The good thing about the rising mortgage rates is that it may cut down on the competition from other buyers. Every first-time buyer has to have a clear budget in mind whenever bidding on a home.
The war in Ukraine is obviously also complicating matters more, adding some uncertainty to the economic landscape.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single-family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.