{"id":1259,"date":"2022-09-22T09:14:14","date_gmt":"2022-09-22T09:14:14","guid":{"rendered":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/2022\/09\/22\/is-the-u-s-federal-reserve-trying-to-bludgeon-the-housing-market\/"},"modified":"2022-09-22T09:14:14","modified_gmt":"2022-09-22T09:14:14","slug":"is-the-u-s-federal-reserve-trying-to-bludgeon-the-housing-market","status":"publish","type":"post","link":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/2022\/09\/22\/is-the-u-s-federal-reserve-trying-to-bludgeon-the-housing-market\/","title":{"rendered":"Is the U.S. Federal Reserve Trying To Bludgeon the Housing Market?"},"content":{"rendered":"

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The housing market has been on fire for the past two years as home prices shot up into the stratosphere. Now the U.S. Federal Reserve is trying to bring them back down to Earth, part of its avowed war against the nation\u2019s runaway inflation. But it\u2019s using a move that could inflict even more pain on struggling homebuyers.<\/p>\n

The Fed hiked its short-term interest rates by three-quarters of a percentage point on Wednesday as it continued its war against surging inflation. This is expected to push mortgage interest rates even higher<\/a> as they tend to follow the same trajectory of the Fed\u2019s own rates. And that\u2019s expected to price additional would-be homeowners out of the market and make purchasing a home even more expensive.<\/p>\n

\u201cHousing is an interest-rate-sensitive sector of the economy,\u201d says Robert Dietz<\/strong>, chief economist of the National Association of Home Builders. \u201cWhen interest rates increase, housing often feels the pain first. Tightening is going to require some pain.\u201d<\/p>\n

Mortgage rates have topped 6% on 30-year fixed-rate loans, the highest they\u2019ve been since 2008, according to Freddie Mac. In the past year alone, monthly mortgage payments have swelled nearly two-thirds higher mostly due to a more than doubling in mortgage rates as well as higher prices. That means buyers today are paying roughly 66% more than they would have a year ago.<\/p>\n

\u201cMortgage interest rates have not yet hit their peak,\u201d says Dietz. \u201cThey\u2019re going to go higher than where they are right now.\u201d<\/p>\n

Rates were up to 6.5% this week for 30-year loans,\u00a0says mortgage broker Rocke Andrews<\/strong>, of Lending Arizona in Tucson.<\/p>\n

\u201cIt\u2019s getting harder and harder for people to [secure] a loan,\u201d he says. Some are considering adjustable-rate mortgages, which offer lower introductory rates and then reset over time.\u00a0 \u201cThey\u2019re trying anything to lessen the pain a little bit.\u201d<\/p>\n

Many real estate experts predict that home prices will fall<\/a> as a result of the higher rates. After all, there is only so much that buyers can afford to pay for housing every month.<\/p>\n

\u201cWe expect some limited price declines nationwide,\u201d says Dietz. Areas that saw the biggest price increases and the greatest influx of investors could fall even harder. \u201cSome of the previously hot markets could see double-digit price declines playing out over this year and the first half of next year as the market adjusts to the new mortgage interest rates.\u201d<\/p>\n

Ironically, the Fed\u2019s goal of slowing down the housing market may wind up making the dire housing shortage even worse.<\/p>\n

Dietz now expects single-family home construction to fall<\/a> by 10% this year, the first time it\u2019s gone down since 2011. This will keep prices high as the supply of homes stays low.<\/p>\n

\u201cMost single-family homebuilding is financed with loans. When interest rates increase, the cost of financing for land developers and homebuilders increases. That reduces the number of homes built,\u201d says Dietz.<\/p>\n

In addition, many people who would have put their properties on the market as they traded up or down likely won\u2019t do that with rates so high. If they buy something else, they\u2019ll wind up spending so much more due to higher rates that it may make more financial sense to stay put.<\/p>\n

\u201cWe\u2019re going to see more, \u2018let\u2019s stay here and fix up our house,’\u201d says Andrews.<\/p>\n

\u201cIt seems like a scary time to buy. They don\u2019t know if they buy a house now, if they\u2019re buying at the top. What if they lose their jobs? It\u2019s an unknown period right now,\u201d he adds. \u201cWhen people are worried, they freeze and stay where they are.\u201d<\/p>\n

The post Is the U.S. Federal Reserve Trying To Bludgeon the Housing Market?<\/a> appeared first on Real Estate News & Insights | realtor.com\u00ae<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

GETTY IMAGES The housing market has been on fire for the past two years as home prices shot up into the stratosphere. Now the U.S. Federal Reserve is trying to bring them back down to Earth, part of its avowed war against the nation\u2019s runaway inflation. But it\u2019s using a move that could inflict even…Read More→<\/a><\/p>\n","protected":false},"author":0,"featured_media":1260,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1259","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts\/1259","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/comments?post=1259"}],"version-history":[{"count":0,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts\/1259\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/media\/1260"}],"wp:attachment":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/media?parent=1259"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/categories?post=1259"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/tags?post=1259"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}