The homebuyers in the market are caught up in a difficult situation. They’re facing a storm of record-high house prices, a shortage of homes, and the rising rates of mortgages.
According to an earlier Gallup survey on homeownership, just 30% of those polled think it’s a good moment to buy a home. The majority (53%) were looking to believe in the past.
Cayce Conti serves as the broker and owner of Conti Realty in Pontotoc and the Northeast Mississippi Board of Realtors (NEMSBOR) president. The board comprises five counties, namely Lee, Pontotoc, Itawamba, Monroe, and Chickasaw – and recently joined The Four County Board of Realtors in Corinth, which brought Alcorn, Tippah, Tishomingo, and Prentiss counties to the fold. Together, the board covers more than half of the counties of Northeast Mississippi.
Conti stated that his housing sector had seen modest drops in sales in a few counties that the board oversees.
“The major issue is an inventory of homes,” he said. It’s been a constant issue during the recent boom in housing. The NEMSBOR generally had between 1,100 and 1,300 houses or more listed on the Multiple Listing Network, or MLS. However, the number has been a mere four figures for an extended period.
“We have a large supply of luxury homes. However, what we’re missing are affordable homes,” Conti said. “That’s the kind of homes we’ve looked at over the last few years – we haven’t found homes priced in the $135,0000 to $200,000 range. It’s the most popular range on the market, but it’s also the most difficult to locate.”
In addition to the challenge of finding affordable homes, and even more affordable ones, is the expense involved in making a home. Supply chain issues and shipping delays have increased the cost of building materials. Construction companies have seen their costs rise by three times since 2020. In turn, they have passed on the price to the buyers.
In addition, the rising interest rates hold an excellent chance of cooling down the sales of homes; Conti said right now, the biggest hurdle to sales is the lack of supply.
Conti said the total number of homes available for sale is under 400 homes. Of these, just 7 percent, or less than 30, are mid-priced.
“That is very small compared to the territory we cover,” the official said.
Rates of interest are increasing as they have increased dramatically from the beginning of this year. Mortgage rates that hovered about 3 percent in January have risen to 5.25 percent. This means that mortgage payments are up 30 percent.
“The property market is beginning to feel the effects of rising mortgage rates and inflation affecting buying power,” said Lawrence Yun. He is the chief economist for the National Association of Realtors. “Still, the homes are selling fast, and gains on home prices are still in the double digits.”
The mortgage rate will remain on the rise while inflation continues to rise. Because the Federal Reserve is fighting inflation by increasing short-term interest rates, the rates of borrowing, such as mortgages, also will increase.
Conti noted that homeowners are somewhat more cautious because of the increase in rates and the growing prices of gas and food.
“It’s changed potential buyers’ perception, as they’re uncertain about their prospects,” he said. “No doubt that there’s been a little decline, but it’s an extreme demand … If we could take inventory of the stock and sell it, we could do so. The market is strong, and buyers are looking to buy.”
