These days the economy has changed a lot throughout the years especially the housing market where prices have risen so much. Due to soaring prices and the stubbornness of high mortgage rates this means Minnesotans will face higher payments. In September new listings were down about 6.4% due to a 17.2% decline. A median sales price is 2.2% up and $370,305. Due to living costs many struggle to accumulate a down payment. Millennials and Boomers are having limited options.
To get some information about this issue, I spoke to my mother, Chee Xiong. She has experience being a buyer and seller, and I asked her what her opinion on the high housing price and high mortgage. She said “it would be good for the seller but not the buyer. Back in 2011 I bought a house for $35,000 and now it’s 235,000. From my experience it depends on the seller because if they really want to sell the house they will favor the buyer.”
Additional buyers are deciding to deploy cash instead of paying interest near 8.0%. Privy to the past housing supply levels used to rise and demand falls, in which the price drops or is more soft. Why the market feels so compressed and prices continue to get higher is owing to the fact that the buyer and seller activities have declined. Still negotiations favor the seller. Moreover, that could mean sellers aren’t as enthusiastic to list their homes.
Whether you’re a buyer, seller or first time house buyer, there are many contributing factors to prices rising. The main one is obviously due to Inflation as covid and other components have affected us, house prices and mortgage do increase. As Xiong notes, “Due to inflation money might not or may be essential to us.”
Additionally, for buyers there are numerous other costs when buying a home, like the closing cost, mortgage insurance, and cost of moving, but the cost for homes do vary by location too. Housing can attribute to demand exceeding supply, housing demand, living conditions, strong economy, and low mortgage rates. To illustrate, federal funds rate and mortgage rates aren’t seemingly related but if there is higher federal funds rate this means for buyers, higher mortgage rates. I
In addition, for the pre-approval amount from lenders will be based on your down payment and monthly payment that you’re able to afford based on your DTI (debt to income ratio). If you have a higher monthly payment you will have a lower loan to handle. This can affect first time home buyers too because if everything is high, first time buyers might be hesitant or unable to enter the market and affordability.
