In the charts below you will see that borrowing costs have risen 74% since January of this year, the second most significant increase in such a short span in over 30 years. The trajectory is incompatible with market pricing and wages. Something will eventually give here. Either interest rates will abate or velocity will.
At today’s interest rates, the payment for a median-priced home of $560,000 (without taxes and insurance and assuming 20% down) is $2,488. In August of 2021, this same payment would have purchased a home valued at $750,000. The payment for a home priced at $560,000 has risen from $1,850 to $2,488 since last August – a 34% increase. Should rates increase to 6%, the same payment will purchase a home valued at $518,000 assuming a constant payment.
No one has the crystal ball that can show us exactly what will happen with interest rates, inventory or demand. But the need for a place to live will remain. Planning and saving to obtain stability for oneself is always a good move!