First-time home buyers Courtney Culbreath and her husband, Tyler Graham, say they’ve been helped and hurt by the fast-moving housing market that is simultaneously cooling down soaring demand yet ratcheting up mortgage rates, which had been rock bottom for years.
“We only paid $72,000 over the $660,000 asking price and we know lots of buyers spent $150,000 or more above the list price,” says Culbreath, a 32-year-old surgeon. Culbreath and Graham, 30, a federal government employee, purchased their single-family home in Herndon, Va., in May 2022 after looking for 18 months and losing three previous bidding wars.
“The house appraised for more than our final offer and we didn’t need extra cash to make up the difference,” says Culbreath. “We didn’t have any contingencies on our offer and so far, the house seems okay.”
Yet they were stung by mortgage rates, which nearly priced them out of the home that came within their grasp.
“When we started looking at houses, rates were at 3.5 percent and we locked in our rate at 4.5 percent when our offer was accepted,” says Culbreath. “We would probably not have bought the house if we waited any longer and the rate was 5.5 percent or higher.”
First-time buyers represented just 30 percent of the market in June, down from 34 percent on average in 2021, according to the National Association of Realtors’ 2021 Profile of Home Buyers and Sellers.
But now the market has shifted again as higher mortgage rates and double-digit price increases are creating even greater affordability issues for many buyers. Competition hasn’t disappeared entirely, but there may be some opportunities for buyers who can handle the higher monthly payments that come with rising mortgage rates.
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