Home Buyers Having Easier Time Bidding as Soaring Interest Rates Price More Out of Market

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Homes are currently selling at the slowest pace since 2012 thanks to the recent spike in mortgage rates.

Experts say they expect rates to continue to rise through the end of the year, but despite those high rates, some believe it's actually a good time to buy a home.

“We're not selling as many houses per month right now, because interest rates have scared some buyers out of the market,” San Diego realtor Felicity Hunter said.

A new loan on a 30-year mortgage now averages near 7%, the highest in 20 years and nearly double what it was last year, according to Hunter.

“They went up rapidly. I mean, this all started happening, I want to say, I think back, maybe like June or July when we started to see these increases. And then, with inflation, I’m guessing they weren't getting the response that they wanted. So they've kept going up. We heard that they could even hit 8%,” Hunter said.

The high rates are also being blamed for slowing construction

“I think that the builders are affected by interest rates as well. So they don't want to have a surplus on their hands as well because if they're gonna have to refinance those homes and hold on to them, those rates kind of start to break into their margins,” she added.

Production is down 8.1% from a year ago, according to the U.S. Census Bureau, contributing to limited supply.

“You know, anytime we see inflation and rates rise like this, I think you'll get a little bit of seller fear going on,” Hunter said.

Still, despite the fewer homes and the skyrocketing interest rates, Hunter said this can be a good time to buy a home.

“Now we're seeing our buyers, you know, get their offers accepted, they don't have to compete with 20 other people and all-cash offers,” she said.

And she anticipates interest will drop at the start of the year.

“You're dating the rate, but you're marrying the house. So you'll be able to refinance,” Hunter said.

According to Realtor.com, the average price for a home in San Diego was $899,000 in September, up nearly 13% from last year.

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