US Home Price Just Won’t Budge
By: Anneken Tappe · August 31, 2023 · Reading Time: 3 minutes
Housing Market Stalemate
It’s a frustrating market out there for prospective home buyers. The average 30-year fixed-rate mortgage rate has doubled since 2021, pushing it higher than it has been in two decades, but house prices haven’t gone down in response.
Despite the incredible surge in interest rates, bidding wars for attractive homes are raging on. Buyers and sellers are locked in a stalemate: Inflation-pressured buyers must cap their bids to meet their increasingly constrained budgets, but there is still enough demand out there to have sellers keep their asking prices up.
And it’s not just a matter of paying the asking price in a red hot market — it’s often a question of how much prospective buyers are willing or able to pay on top.
The State of Housing
Following a pandemic buying frenzy, a jump in material and labor costs, and rising interest rates, there are dramatically fewer homes available for sale.
U.S. housing inventory remains near record lows. With so few existing homes on the market, there is fierce competition for the homes that are available. And with mortgage rates high, people are thinking twice about whether to sell their current houses.
In a normal market, a significant decrease in sales would ordinarily force buyers to reduce their asking prices and cool off the housing market. But that’s not happening — the median price of a resale home remains more than $400,000.
Locked-in Mortgage
To see the patterns behind this perfect storm, we need to circle back to 2020 and 2021.
During these years, tens of thousands of homebuyers secured or refinanced mortgages at rock-bottom rates of just 2% to 3%. Today, the average mortgage rate sits above 7%. With prices and interest rates high, if a homeowner with a 3% mortgage wanted to move today, they’d likely be forced to move to a smaller home and a higher monthly payment.
With this in mind, it doesn’t make much financial sense for these homeowners to move. As a result, many homeowners are staying put, reducing supply. All that adds up to a less-than-ideal market for homebuyers. Nothing’s fair in love and bidding wars.
Check out SoFi home mortgages options.
Terms and conditions apply. Before you apply for a SoFi Mortgage, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and loan amount. Minimum loan amount is $75,000. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria/. Information current as of 08/30/23. SoFi Mortgages originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org). Equal Housing Lender. SoFi Bank, N.A. is currently NOT able to accept applications for refinance loans in NY.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS23083102