Navigating today's housing market amid soaring interest rates
(CBS DETROIT) - You might have found the perfect house, but between the price and the interest rate, you're not sure if you should buy.
Dan Elsea, President of Brokerage services for Real Estate One, has been watching the real estate market closely. He said although home sales have dropped 20% compared to last year, that's not necessarily a negative.
"The last two years, the market's been just an unsustainable frenzy, it really has been too strong," said Elsea. "It's been heading towards that bubble world that we always worry about."
But now interested have soared compared to last year. We compared the estimated monthly cost of a home from last year, the price has shot up more than 400 per month, just because of the interest rate.
"They're up double of what they were in terms of interest rates, but 7% is still historically a pretty normal interest rate."
Many people are seeing 7% interest rates on their home loans and that's with good credit, but what about if your credit is not so good?
"If your credit score isn't as strong, it might be seven and a quarter, seven and a half. So it's not like an eight or 9% rate," Elsea explained.
Elsea said the higher interest rates are temporary.
"Overwhelming odds are that that rate's going to go down in the next year or so, so you're going to refinance at a lower rate," he said.
Overall, the number of homes on the market is low, which would typically make it a seller's market, but the higher interest rates has kept it from getting out of hand.
"The market is different, the pace is not as crazy. So whatever their neighbor did six months ago and how fast that home sold, and all the extra offers that they received, that's probably not going to happen for them," said Elsea.
You can make your house more attractive to buyers by doing some updates.
"There aren't as many new homes being built, so people looking for new homes can't find them, so they go to renovated homes and therefore you have more buyers looking at renovated homes so it increases the activity," he said.