5 Tips for Buying a Home in Today’s Market

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Consumers across the country have been braving an overheated housing market the past two years, with frantic buyers bidding up home prices to astronomical levels. Low mortgage rates, a

pandemic-related increase in demand for home office space, and a housing shortage in many areas have all sent home prices soaring. In January 2022, for example, the median price for a home

in the U.S. was $375,000; by June, it hit a record $450,000, an increase of nearly 17 percent, according to Realtor.com. ​

Recent increases in mortgage rates are taking some of the pressure off the housing market, but the fever hasn’t broken. Here’s what to expect going forward — and what you should doing if

you’re planning on buying or selling a home.

With lingering pandemic-related supply-chain issues, high gas prices and the war in Ukraine, inflation climbed to 8.5 percent the 12 months ended July. In an effort to cool the economy — and

inflation — the Federal Reserve has raised interest rates four times this year so far, and is expected to raise rates again in September.

Mortgage rates have risen sharply as the Fed has tightened monetary policy. Thirty-year fixed-rate mortgages were 3.22 percent in the first week of January 2022. By the first week of June,

the 30-year rate had climbed to 5.09 percent. Assuming a 20 percent down payment on a $450,000 loan, the monthly payment on a 30-year mortgage financing $360,000 jumped from $1,301 to

$1,999.

Lately, however, some experts say that housing market is cooling. Greg McBride, chief financial analyst at Bankrate.com, expects the Fed to keep raising rates to get inflation further under

control. However, with the risk of recession rising every time the Fed hikes rates, mortgage rates are more likely to go down rather than up. “This is contingent on inflation peaking and

beginning to show signs of easing. But if inflation continues moving to new highs, then all bets are off."​