As spring settles in, this year’s peak season for buyer activity in the housing market looms closer. Home buyers and sellers can expect the market to pick up speed beginning in late May, but both parties are left wondering about the current state of real estate affairs. With mortgage interest rates constantly shifting and mixed predictions about the state of the housing market, what exactly can buyers expect to run into while buying a home in Henderson, NV? This guide provides an in-depth explanation of various real estate factors and how they affect home buyers specifically. If you’re looking to buy a home this coming season, you’ll want to keep this guide on hand to prepare yourself.
Mortgage interest rates
Before you dive into the intricacies of mortgage interest rates, it’s crucial to understand how the federal funds rate works. In essence, the federal funds rate is a benchmark set by the U.S. Federal Reserve. Banks charge each other at this particular rate when they loan money to one another. It affects other rates, including but not limited to credit card interest, savings account interest, and the most important one for home buyers: mortgage interest rates.
Mortgage interest rates are affected by the federal funds rate and any other rates active on the market. They ultimately influence the cost of housing, so if mortgage rates increase, so will the monthly payments for mortgage loans. Likewise, if mortgage rates decrease, monthly mortgage payments will also decrease.
How does this affect buyers?
The fluctuation of mortgage interest rates plays a significant role in housing affordability. Every mortgage lender has its own set of interest rates, and the ones they offer you will depend on your credit score. It’s generally advised to have a credit score of at least 700, with the most favorable score being 740 or above
for the best rates. Buyers also want to play a bit of a waiting game when selecting a rate, considering rates change alongside the market. A common approach is to receive quotes from at least three lenders on a given day and select the best one.
Housing and inflation
Inflation affects the purchasing power of currency. For example, if inflation is currently 10%, that means everything will cost 10% more. An item ordinarily worth $150 will be worth $165 with inflation. Inflation affects everything — including the housing market
Whenever inflation rises too high, the Federal Reserve will attempt to curb it by increasing the federal funds rate in order to reduce how much money is flowing. Inflation cannot be permanently eliminated, but the Federal Reserve prefers to keep it at a low, steady rate as much as possible.
How does this affect buyers?
A significant rise in inflation will cause home prices to skyrocket, turning buyers away from the market. When the Federal Reserve increases the benchmark rate, mortgage rates will also increase — thus turning buyers away again. This is a strategic move to reduce buyer demand and thereby cause home prices to fall. It demands patience from buyers and sellers alike, but it’s crucial in preventing inflation from spiraling out of control.
Inventory and home construction
The intertwined effects of supply and demand play a pivotal role in the polarity of the market. If the demand exceeds the supply, the market shifts in favor of sellers, known as a seller’s market. Prices rise considerably, especially if the construction of new homes cannot keep up with the demand for them. When the supply exceeds the demand, the market pivots in the opposite direction to favor buyers — a buyer’s market. Prices tend to drop in a concentrated effort to attract buyers and sell in a timely manner.
How does this affect buyers?
Right now, the demand for housing greatly exceeds the available supply, and home construction has been impeded by rising labor and supply costs. There aren’t enough homes being built to accommodate the new generation of first-time homeowners or even people hoping to relocate to a more desirable community. Buyers can thus expect to encounter a seller’s market and higher home prices this coming season.
Should you buy a house right now?
Despite the rising interest rates, buying a home in Henderson, NV, is still a good idea, especially if you’re eager to buy as soon as possible. As home prices soar and buyers step away from the market, experts predict prices will decline — but not by a catastrophic amount
. The housing market will steadily plateau in an effort to encourage buyers to return. Inventory is still far too low for prices to suffer a significant drop.
So, if you want to buy a home, it’s best to do so this year while prices are expected to decline, and inventory continues to dwindle.
Recruit a reliable real estate agent
Of course, the home-buying process greatly benefits from having a well-experienced and trusted real estate agent on the team. One of a real estate agent’s primary duties is to keep themselves apprised of any and all developments in the market, including the fluctuation of mortgage interest rates. Agents are also equipped with a variety of other skills and expertise to streamline the home-buying process, thereby minimizing stress while guaranteeing the best possible deal on a property. You’ll buy a home in little time for as little money as possible, and the best part is you don’t have to pay your agent’s commission. The home seller is almost always in charge of paying the commission costs for both agents involved.
Are you looking to purchase a home soon? For the best agents on the market, contact MDB Realty
. This brokerage is a local, award-winning group of real estate experts committed to client success. Their wealth of expertise will surely prove invaluable in buying a home in Henderson, NV. Reach out to them today to get started!