Mortgage rates have dropped from over 6% (see the lowest mortgage rates you can qualify for) and many homes are seeing price reductions. So buyers may wonder: Is it time to buy, and if so, what should I know before I do? So in our series of conversations with prominent real estate experts about the housing market, we interviewed Jacob Channell, Senior Economist at LendingTree. In addition to providing comprehensive macroeconomic analysis, he conducts research on a variety of topics related to the US housing market. Here are his thoughts on the housing market right now.

Salespeople are losing their power.

Sellers had a lot to gain during the pandemic. “There were so many buyers and homes were selling so quickly that sellers could charge things that would not be acceptable in the normal market, such as 10% or 20% more for a home than what they paid for it a few years ago. Today, that is changing and sellers are finding that they are making more offers to sell their homes.” This is good news for buyers because it means they have more wiggle room to negotiate things like the price of the home or whether or not the seller will pay the closing costs for the buyer.

But buyers may still have affordability problems

Although rates are down from their peak in June (when they were over 6 percent), the overall trend since the beginning of the year has been for mortgage rates to rise. “This means that new buyers may end up spending more on their mortgage payments than they did at the beginning of the year,” Channel says. Moreover, “while the housing market is finally showing signs of slowing down, prices remain high in many parts of the country.” These high prices, combined with rising costs, make housing unaffordable for many, especially low-income and first-time buyers, Channel says.

Check out the lowest mortgage rates you can get here.

Adjustable-rate mortgages are making a comeback — but be aware of the caveats before you jump in

Channel says, “Adjusted-rate mortgages (ARMs) are becoming more popular this year, as they’ve been on the rise for the most part. In fact, the number of ARMs offered to borrowers has tripled since 2021.

Because ARMs typically offer a lower introductory price than their fixed-rate counterparts, they may seem like a good option for some buyers. Unfortunately, ARMs are risky, and they can quickly become expensive as prices rise. Although today’s borrowers are better equipped to arm themselves with ARMs than they were before the housing crash of 2007-2008, which means ARMs probably won’t cause another crash anytime soon, buyers should still be on the lookout. It could be low for ARM before they rush to get one,” says Chanal.

Maybe you don’t need to fear a major housing market crash.

When home prices rise as quickly as they have over the past two and a half years, it’s only natural that people wonder if the record price growth will turn into a similar dramatic decline. “Home prices rose dramatically before the Great Recession and then it happened. Although no one can predict the future and say with 100% certainty that everything will be “A-OK,” current data suggests that a 2007-2008-style crash is probably not in the cards. Although home prices have fallen in some areas, people today are in a much better position to handle mortgage payments than they were 15 years ago. “This means we will not see the kind of destruction we saw before the Great Recession,” he said.

Bottom line: “Both new buyers and current owners should be careful not to bite off more than they can chew and pay their bills properly, but they should not use sleep for fear of falling asleep.” “Tomorrow the entire housing market is ruined,” says the channel.