Homebuyers may be changing the parameters of what they’re looking for in a home, as mortgage rates have just hit 5%, making the cost of a home more expensive when it comes to the monthly mortgage payments, often by $700 or more.
Far from being something just affecting Sonoma County, this rise is nationwide. Here’s the numbers for the typical home being sold in the U.S.: The median price for a home has risen from $309,200 in December 2020 to $357,300. Over that same period, interest rates rose from 2.67% to 5.08% this week. With a 10% down payment, that has pushed the monthly payment up from $1,124 to $1,742 — a 55% increase. That’s the impact higher prices together with rising rates are having on new homebuyers.
The silver lining with this increase is that many sellers have started lowering their asking prices, as they notice that many homebuyers are less enthusiastic – or able – to purchase the home at these rates. This isn’t a complete fix for many buyers, as the average borrower is now paying about 38% more than they would have for the same home a year ago on a monthly payment.
Some homebuyers have decided to stop looking completely, while others have decided to re-evaluate what they’re looking for in a home – often going smaller than originally planned, or in some cases, choosing a fixer-upper over turnkey.
One way to find a fixer-upper is to search for houses listed at far below the current median of $795,000. Here’s a look at 6 houses currently listed for less than $500,000.
Click through our gallery above to preview the latest homes listed for less than $500,000