Homeowners looking to downsize wonder if they should sell now before higher mortgage rates push home prices lower or hunker down with their 3%-range loan.
SEATTLE – Baby boomers planning to downsize in retirement face a dilemma: Should they sell now while home prices are high since rising mortgage rates could push a drop in those prices – or should they hold onto their current home that’s too large because their current interest rates is somewhere in the 3% range?
Life goes on regardless of any current real estate market, and the decision covers more issues than just the financial value of a home.
“A lot of Americans are sitting on piles of money in their homes, and some are opting to cash out even if it means giving up their low mortgage rate; they’re worried there’s a possibility home prices will fall if rates remain elevated,” says Redfin Chief Economist Daryl Fairweather, who expects current mortgage-rate levels to hang around for a while.
“But we also expect prices to stay high into next year,” Fairweather adds. “Housing supply is so strained that even a small uptick in listings lures buyers off the sidelines, bolstering sales.”
According to Redfin’s latest report, pending sales ticked up but closed sales ticked down because about 16.3% of pending sales failed to close after buyers backed out.
“Buyers are extra cautious right now. They want to make sure they’re getting a good deal given how much mortgage payments have gone up, and when they don’t feel like they’re getting a good deal, they’re backing out,” says Heather Kruayai, a Redfin Premier Agent in Jacksonville.
“Transactions are also falling apart due to skyrocketing insurance premiums and disagreements between buyers and sellers over necessary repairs. Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close the deal.”
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