FLINT, Mich. — Mortgage rates have recently increased, but some realtors said this is about a normal market as any to buy a home.
Realtors said this is because house listings that were recently going above asking price are dropping down.
Right now we're actually in a normal housing market,
That's according to Rieley Prevett, a Vylla Home Realtor. "The last two years after the pandemic was crazy and it has finally went to some normalcy," Prevett continued.
Realtors said the market a few months ago is not the same market as today, despite the recent federal interest rate increase.
Prevett said they are still seeing multiple offers in homes, but no where near as many as they were before. And with the new federal interest rate set at 3.15%, economists expect to see that number continue to decrease.
She also said the federal interest rate is not good because "the higher the interests rate the more interest you pay on a mortgage."
"Now in order to keep monthly payments the same in the face of this higher interest rate, housing may have to fall by 25%," said Prevett.
"Perhaps by normal what she means is we're not seeing the red hot homes sales that we saw this summer and the previous year. . . In the sense that you have people making multiple offers, people offering over asking to get to the top of the line to buy the house," said Chris Douglas, Economics professor at University of Michigan Flint.
"Now in order to keep monthly payments the same in the face of this higher interest rate, housing may have to fall by 20%," said Douglas.
This means those who purchased hoe before now could be facing higher interest rates depending on their mortgage agreements, or they may lose money when looking to sell from prices on homes dropping below what they paid.
"Which means you're under water on the mortgage, you can't move, you can't sell your house.. and what we saw 12 years ago when this happened was people being under water in their mortgage started foreclosing." Douglas said that's because people do not want to pay more for a house that is worthless than their own. But, he said this can also have a very good effect on the economy.
"Things are returning perhaps more towards normal, and what that might mean is housing will eventually start to correct. If housing stabilizes, I think that stabilizes the overall economy," said Douglas.
He said once inflation numbers come out for this month, it is possible housing prices will fall, once again. And if that happens, he said it will have a good effect on the economy as a whole.
In the meantime, Fannie Mae is predicting interest rates will fall below 5% in April 2023.