WHAT IS A HOUSING RECESSION?
A housing recession is simply a way to refer to the current combination of fewer home sales, lower new construction housing starts, and the decline in mortgage lending due to higher interest rates and fewer refinances. The term “housing recession” is a relatively new term that has recently gained popularity. It does not mean the housing market is collapsing or that house prices are plummeting. While house prices have cooled in many markets, they are still elevated due to high demand and low supply.
HOW DOES A HOUSING RECESSION IMPACT SELLERS?
If you’re a home seller, you may need to readjust your expectations in terms of the price you may be able to get for your house. Also, you may want to consider offering “seller concessions” in order to make your home more affordable to a wider range of buyers. This could include an allowance for repairs and improvements or paying points to reduce the buyer’s interest rate and monthly payment. It’s also more important than ever to price your home right so it doesn’t sit on the market for too long.
HOW DOES A HOUSING RECESSION IMPACT BUYERS?
If you’re a home buyer, you may need to readjust your expectations in terms of current interest rates and the price range of the house you can afford. Just because you may have qualified for a certain price range in the past doesn’t mean that you can still qualify for that same price range now. That’s because interest rates have nearly doubled in the past year, and they may continue to increase in the months ahead. You may want to take action sooner rather than later in order to avoid getting priced out of the market due to rising interest rates. There are a few things you can do to improve your affordability, such as using a “2-1 Buydown” and/or a 5-year or a 7-year adjustable-rate mortgage (ARM).
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