High Mortgage Rates Are Fueling Record Housing Pessimism—So Why Are Experts Saying Now Is the Time to Buy? An overwhelming 84% of respondents in a recent Fannie Mae survey believe that the current housing market is unfavorable for buying a home.
By Madeline Garfinkle •
Key Takeaways
- Only 16% of Americans last month considered it a good time to make a home purchase, matching the all-time low from the previous year.
- High mortgage rates have emerged as the primary driver of consumer apprehension about the housing market.
- Still, experts say when mortgage rates drop, home prices will rise.
When it comes to the current housing market, the outlook for many Americans is grim.
In a Fannie Mae survey last month, 84% of respondents expressed that now is an inopportune time to buy a house — a record high for the monthly report that surveys 1,000 consumers with over 100 questions about the current market.
In contrast, a mere 16% considered it a favorable time to make a home purchase, matching the all-time low recorded last year.
Doug Duncan, Fannie Mae's senior vice president and chief economist, noted that high mortgage rates are intensifying consumer apprehension about the housing market.
"Mortgage rates persistently over 7 percent appear to be deepening the malaise consumers feel about the home purchase market," Duncan said in the report. "In fact, high mortgage rates surpassed high home prices as the top reason why consumers think it's a bad time to buy a home, a survey first."
Duncan added that unfavorable mortgage rates were also the top reason respondents considered it a bad time to sell a home.
Is it a good time to buy a home?
Despite high interest rates and a grim outlook from the most recent survey respondents, some experts suggest it is a good time to buy — before the rates eventually go down again.
"When mortgage rates drop, and more buyers come back into the market, home prices will rise," Melissa Cohn, regional vice president of William Raveis Mortgage, wrote in a newsletter obtained by Bankrate. "Remember, you 'Marry the house and date the rate.'" (Meaning buyers may take on a rate now but can always refinance later.)
In June, "Shark Tank" star Barbara Corcoran said that buyers should seize the day, because when rates inevitably drop, the market will quickly pick up again.
"Right now, what everybody's afraid of is the high-interest rates," Corcoran said in an interview with FOX's "The Claman Countdown." "But the minute those interest rates come down, all hell is going to break loose, and prices are going to go through the roof."
If you are in the market, Emma Hernan, real estate agent at The Oppenheim Group and star of Netflix's "Selling Sunset," told CNBC in August that real estate is the "best investment" one can make, and that buyers should be intentional — in any market — about where they purchase.
"It's best to buy the smallest home in the best neighborhood because you're buying into the neighborhood. Your value will go back up a lot faster," Hernan told the outlet. "You never buy the best home in the worst neighborhood."
