Interest rates

Rising interest rates lead to a slowdown in the housing market

Many fear a repeat of the 2008 recession, but some local experts say there are differences in optimism this time around.

LANCASTER COUNTY, Pa. — As the Federal Reserve continues to raise interest rates in an effort to curb inflation, the housing market is cooling.

Nationally, home sales fell nearly 24% from the same time last year and interest rates soared from less than 3% to over 7%.

“That’s about $8,200 more a year in mortgage payments,” said Greg Bardell, president of the Lancaster County Association of Realtors.

It also makes it more expensive to build houses.

“Builders have to borrow money — they’re businesses — to build houses,” said Yeva Nersisyan, an economics professor at Franklin & Marshall College. “And if they have to borrow that money at a higher interest rate because of the actions of the Fed, there will be fewer houses to build.”

With more rate hikes expected in the coming months, many fear a repeat of the 2008 recession.

But Bardell says there are differences this time around that give him optimism.

“Average sale price is 12% higher than it was a year ago, homes are still selling for 101-102% above asking price even now,” he explained. .

Bardell says it’s still a seller’s market, and for buyers, now is the time to act.

“Trying to get into a house quickly, getting an interest rate locked in, is really a smart thing to do right now,” he said.

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