High Mortgage Rates? High Prices? Some Home Buyers Say ‘No Problem.’
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Here's your money briefing for Friday, October 28th. I'm J.R. Whelan for The Wall Street Journal. The average 30-year mortgage rate has risen by a lot this year, and this week it topped 7% for the first time in 20 years. High borrowing costs are making a lot of people think twice before buying a home. But for others, there's no better time than the present.
People can take their time. They can offer a reasonable price, generally not much above list price. And it's just a generally calmer buying experience.
So how has the financial side of buying a home changed? Our economics reporter Ben Eisen has been talking to people who've bought a home in this year's housing market. We'll talk with him about it after the break.
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How did mortgage rates and home prices change entering this episode?
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The housing market has taken a sharp turn compared to a year ago. Interest rates are now above 7%, sales are falling, and prices are near the high levels they were at last year. But despite all that, some prospective homebuyers have found this is the perfect time to buy a house. Wall Street Journal reporter Ben Eisen wrote about this, and he joins me now. Hey Ben, thanks very much for being with us. Thanks for having me. So Ben, we've talked a lot on this show about how higher interest rates have pushed a lot of prospective homebuyers to the sidelines. So who is it that's actually out there buying homes right now?
The people who are still buying in this housing market tend to have some common characteristics I've found. One thing that we saw is that it's middle-of-the-road buyers who are actually in a better position to buy right now. They're not as impacted by inflation as the lowest-end buyers, and they're not as impacted by falling stock and bond prices as the higher-end buyers. So you actually see that segment of the housing market dropping less than the segment that's both bigger and smaller.
Okay, but prices are still high and mortgage rates could continue to move higher. So what do prospective buyers see in this housing market that's so attractive?
A lot of people obviously have been pushed out of the housing market and it is a very hard time to buy. But for those folks who have decided, you know what, I'm going to go ahead and buy anyway, they're finding a slightly different housing market. Well, very different from last year. The housing market is cooler, so you don't have the bidding wars, the sight unseen purchases, people waiving some of these common safeguards that come with buying a home such as the ability to get out of it if the mortgage falls through or the inspection doesn't come in as expected. Instead, people can take their time. They can offer a reasonable price, generally not much above list price. And it's just a generally calmer buying experience, which some people have found attractive.
And a lot of people are seeing prices getting cut. So they're actually getting the house for less than what the initial asking price was.
Yeah, let's talk about some of these buyers.
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