Fewer Buying Homes as Rates Rise

Mortgage applications continue to fall nationwide as interest rates climb.  Applications fell six percent last week with the average interest rate on a 30-year loan now at 4.64 percent. 

However, at least one Houston realtor argues each of the Fed's quarter percent rate hike only amounts to an additional $50 in interest each month locally.

“Maybe it's the thought of this huge jump in cost of carrying that loan, but the reality isn't that drastic,” says Christi Borden with Better Homes and Garden Real Estate.  “So I think maybe it's the perception more than the reality that might be causing some fear on a nationwide level.”

“But I think that buyers need to budget for that and I've been telling my own buyers if you're tight right now at qualifying you should do it now.”

Overall sales of single-family homes in Houston rose 8.9 percent in January though the average price fell 2.1 percent, according to the Houston Association of Realtors.

Borden says the biggest issue in the Houston area is a lack of inventory after Harvey, which is driving up prices.

“We just don't have the amount of new construction available or homes to choose from, so they're competing, and that tends to drive prices up.”

While the local market has steadily recovered from the oil downturn a couple years ago, Borden believes a new problem could be lingering in the wake of Harvey.

“Lenders are letting them skip payments while they try to rehab their home and I think some of those folks may not be able to catch up, so we may see some foreclosures coming down the line, but we don't anticipate it to be drastic.”

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