Why the D.C. housing market won't be cheaper this spring
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Lower mortgage rates won't make buying a home much easier or cheaper this year, Axios' Emily Peck reports.
Why it matters: Steep borrowing costs are just one piece of the housing affordability crisis.
Zoom in: Lower mortgage rates could push up home prices in the DMV and nationwide if demand surges and inventory remains tight.
What they're saying: "Once interest rates had a 6 in front, tons of buyers came out of the woodwork," and bidding wars multiplied this winter, DMV agent Russell Brazil tells Axios. In some instances, he's heard of 30- to 40-plus offers on one house.
- But sellers are locked into place, reluctant to give up sub-3% mortgage rates. That, and 15 years of underbuilding, have led to an inventory crisis, Brazil says.
It will be tough for buyers until more supply hits the market.
State of play: 30-year mortgage rates are down from 20-year highs, but have crossed 7% again.
- Experts don't expect the Fed to make interest rate cuts until May or June.
Flashback: In 2021, when rates hovered below 3.5%, bidding wars were rampant and home prices surged by double-digit percentages.
- Historically, home prices are elevated in spring and summer when more buyers are out bidding.
Reality check: Mortgage rates aren't guaranteed to fall. But if they do and curbing inflation is the primary motivation, home values and competition likely won't cool, Matt Graham of Mortgage News Daily says.
The other side: "If the drop involves disinflation and early signs of an economic recession, there would be more relative relief for those left in the market when it comes to affordability and competition," Graham tells Axios.
The bottom line: Many potential homebuyers still can't catch a break.
Go deeper: America's housing affordability crisis makes a comeback