The current housing market is one of the most challenging in recent memory for buyers. Home prices have surged to record highs, while interest rates have also increased. This has made it difficult for many buyers to afford a home, and there’s not much evidence that things will get better any time soon.
The news isn’t great for homebuyers right now. According to a recent CNBC article, the National Association of Realtors (NAR) says the median existing home price in the United States reached $413,800 in September 2023. This is up 8.4% from a year ago. At the same time, the average interest rate on a 30-year fixed-rate mortgage has risen to 7.19%, according to Freddie Mac. These high prices and interest rates have made it difficult for many buyers to qualify for a mortgage. According to the NAR, the percentage of buyers who put 20% or more down on their home purchases fell to 30% in September 2023. This is down from 41% in September 2022.
As a result, some buyers are turning to adjustable-rate mortgages (ARMs) in an effort to make their monthly payments more affordable. ARMs have lower initial interest rates than fixed-rate mortgages, but their rates can adjust over time. This means that buyers could end up paying more in interest over the life of their loan. Even so, demand for ARMs jumped nearly 10% in September 2023. This is the highest level of demand for ARMs since 2007.
It’s a bit of a perfect storm in the real estate industry at the moment that has led us to the situation as it stands. Here are some of the reasons why buyers are struggling to find affordability in the current housing market:
If you are struggling to afford a home in the current market, don't give up. There are still ways to find a home that you can afford. The current housing market is challenging for buyers, but there are some things that you can do to improve their chances of success. Here are a few tips: