Today’s high inflation has triggered aggressive action from the Federal Reserve, which many economists fear is us. It led to failure. This is where these concerns come in. Home prices They are at a high level and Mortgage rates They’re on the rise, causing home buyers to weigh whether they should buy now, or wait to see if home prices can fall from the recession.

US Consumer Price Index (CPI) increased. In June to 9.1%, according to the Department of Labor. It was the biggest annual increase in more than 40 years and more than many had predicted for the month. The Federation has. The federal funds rate has increased It intends to control inflation and do so. Such actions will indirectly cause mortgage rates to jump.

“We may be headed for a recession and recession next year, but it’s impossible to predict exactly what will happen,” said Robert Frick, corporate economist at Navy Federal Credit Union. “My best guess is that the Fed will raise rates as long as inflation is high. But if gas prices fall and inflation drops to 5%, the Fed will stop raising rates.

Home prices are likely to fall regardless of the economic downturn.

Housing inflation storms are driving buyers out of the market, which has helped fuel an extended supply of extremely limited properties—but sellers are still reluctant to drop prices. For buyers with time, despite the recession, waiting may be their best bet.

Realtor.com reports that the number of homes for sale in June saw the largest increase in inventory. Active listings jumped 18.7% year-over-year, but home prices remained stubborn.

The national median active listing price in June was up 16.9% from the previous month, reaching an eye-watering $450,000. So far, home prices are up 31.4 percent from June 2020.

Mike Birea, a New York real estate agent at Triplemint, said it may take time for prices to retreat as sellers still hope to get top dollar for their properties.

“Sellers are trying to price their homes in line with recent comparisons that close in 2021 — when interest rates are still at historically low levels and there is no inventory,” Birlya said. But many buyers want to see what happens in the fall market, with more inventory and also more competition.

Home buyers buy now or wait?

Advice on whether now is a good time to buy is mixed. In the year Unlike the previous downturn during the 2008 financial crisis, inflation is now rising and employment remains healthy. June’s job growth was above most economists’ expectations.

“Normally, if we were in a recession, the Fed would pump money into the market. The Fed is not doing that now because inflation is so high,” said Ken Rosen, chair of real estate and urban economics at Berkeley Hass Fischer. “This will be a slow response and inflation will take time to come down.”

Regardless of market conditions, buyers should consider their budget, income stability and emergency funds before jumping into today’s housing market.

Plus, it will help you decide how long you plan to stay in the home, whether to buy now or wait. For people who don’t plan to stay in the home for at least five years, buying now means losing money if the market declines and you need to sell.

On the other hand, trying to time the market can mean missing out on your dream home. If prices continue to rise and home values ​​don’t drop enough to offset higher borrowing costs, you could be pricing yourself out of the market.

“The best time to buy a home is always yesterday,” says Antonio Bruno, a Beverly Hills agent with The Friedman Group. “Sellers are more realistic when pricing their homes, which buyers can use to their advantage and buy when inventory increases.”

According to Frick, if the economy enters a recession, mortgage rates could drop to 4 percent or lower. He said this could be a good time to wait and save, especially for first-time home buyers.

“Another strategy is to live cheaply and save,” Frick says. “House prices will freeze. If you can live with a relative, you can save like crazy to avoid paying rent.

Did sellers miss out on high prices?

Homeowners on the fence about selling their homes may have missed out on the current high point of sales in the housing market, but that doesn’t mean they have to wait. Most real estate experts agree that prices are on the way down, so holding off on selling until next year or next month could cost some sellers thousands of dollars or more.

“We’re still seeing a strong seller’s market in some markets around the country,” said Todd Shinin, chief operating officer at HomeSphere Mortgage. However, we are starting to see many other areas cool down a bit.

Where can house prices fall?

According to ATTOM Data’s Special Housing Risk Report, some markets are at risk of falling home prices.

New Jersey, Illinois, and inland California make up 34 of the 50 states most at risk of price deterioration. Chicago and New York City were home to eight and six vulnerable counties, respectively. The report measured housing affordability, unemployment and other economic indicators in the first quarter of 2022.

“While the housing market has been exceptionally strong over the past few years, that doesn’t mean there aren’t places to be exposed if economic conditions weaken,” said Rick Sharga, CEO of ATTOM Market Intelligence. press release. “With weak affordable housing markets and relatively high unemployment rates, underwater lending and foreclosure activity could be at risk if we enter a recession or experience a more moderate recession.