The booming economy comes with a caveat in the housing market...rising mortgage rates. Thanks in part to the Federal Reserve raising its benchmark rate and a sell-off in the bond market, mortgage rates are now at their highest level in seven years. The average rate on a 30-year fixed mortgage for a typical borrower is now about five percent, up from around four percent at the start of the year. That has prompted "panic buying" in some markets, as buyers look to close before rates get any higher.
Here in Houston, things are a little different. "It's a good seller's market," says Michael Weaster with Berkshire-Hathaway in Houston. "Buyers who want to buy, can afford to buy, and have good credit, can buy...and that's pretty much the way it's been for the last six months." That isn't to say there isn't frustration in the market. "A lot of buyers are trying to get pre-approved, a lot of buyers disappointed they can't get pre-approved because of their credit scores and things like that," he says. "A lot of people who want to buy a house still can't buy a house, believe it or not."
Perhaps the biggest reason Houston is not necessarily following national housing trends is the ongoing impact of Hurricane Harvey. "We still have a lot of things going on with the fallout from the hurricane, and believe it or not a lot of these homes are still sitting vacant," says Weaster. "There are also a lot of nervous people about this new city ordinance that the mayor and city council enacted, where they want to raise everything six feet up off the ground."
Overall, Weaster doesn't believe the rising mortgage rates are cause for anyone to panic. "You have to remember that five years ago, (interest rates) were traditionally a lot lower than they should have been, and so now the market is just trying to correct itself," he says.