ORLANDO, Fla. — Realtors say buying a home has become as challenging as it’s ever been.
Not only are prices high, interest rates are rising quickly, leaving many prospective buyers priced out of the market.
“Ask any realtor and they’ll tell you, it’s a seller’s market.” Orlando-area realtor Ray Lopez said. “In Orlando, we usually have an inventory of about 10,000 homes for sale. As of right now, as of last month, we only have about 2,400.”
Lopez has been selling homes in Central Florida for decades. He says low inventory means higher prices, but houses are still selling fast with multiple offers, many receiving cash offers from out-of-state investors.
Andrew Yoerger with the Bank of England says inflation is also posing a challenge for new homebuyers.
“Interest rates have really increased with inflation,” Yoerger said.
In November, the average interest rate was 2.95 percent. Now, it’s approaching 5 percent.
To put it in perspective, in November, a $400,000 loan cost $1,676 per month. The mortgage payment for that same loan is now $2,147, an increase of approximately $500 each month.
“When we pre-approve someone, we pre-approved them on their monthly payment,” Yoerger explained.
That means many buyers with a loan pre-approval could be priced out now, and forced to buy a less expensive home in a different neighborhood.
However, there is a silver lining: If interest rates are high for the average homebuyer, that means they’re even higher for investors.
“Interest rates going up doesn’t help you, but it is getting a lot of mom and pop investors out of the race, " Lopez said.
Despite the high interest rates, experts also say now is a good time to buy. The home a person waits two years to buy just to save a few thousand dollars in mortgage payments will have appreciated tens of thousands of dollars in that same time period.
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