CLEVELAND — When we speak of inflation in the economic sense, it means costs are higher for the same amount of goods and services than they were previously.

What You Need To Know

  • Inflation is still on the rise 

  • 2023 was the slowest year for exisiting home sales 

  • Homeowners and buyers are struggling 
 

But how does it affect the housing market and buyers?

David Kleinhenz started looking to buy his first home a year ago.

He’s had a difficult time with interest rates and home prices being high.

“I probably toured like 15 or 20 different places and I put an offer in on about five of them and I was getting consistently outbid by cash offers,” Kleinhenz said.

Kleinhenz said he’s going to take a couple months off from looking, hoping for rates to go down. 

“My price range that I’m working with now is going to get me a lot less than it would’ve a few years ago. But I’m looking at probably like on the low end around 120 and on the high end 160, 170,” Kleinzhenz said.

Just like Kleinhenz, many other Ohioans have experienced this same issue.

According to the National Association of Realtors, last year was the slowest for existing home sales since 1995.

Adam Neft with Go Mortgage said a lot of homeowners bought a long time ago and their mortgage rates are at really advantageous terms that we may never see again in our lifetime.

And when they’re ready to sell, they run into a dilemma. 

“They come to folks like me and other mortgage lenders and see oh my goodness, a rate in the sixes, a rate in the sevens, why would I trade my threes for almost double that and so they’re waiting to make that move. They’re waiting to sell, they’re waiting to see when the market subsides,” Neft said.

And Neft said buyers are faced with a couple different headwinds with rates being up. 

“The homes they can afford are probably a little smaller, probably a little cheaper, maybe in a different part of town than where they were looking. In addition to that, because folks aren’t selling there’s more limited inventory,” Neft said.

Neft said for the people who do want to buy, the demand is going way up, in turn, pushing prices up. 

But he said just because rates are up, don’t wait to have a conversation. 

“I think any individual, any family, any couple that’s looking at this and saying we’re not going to have a conversation until we hear rates are better is really doing themselves a disservice because when rates do subside, there’s probably going to be additional buyers in the market, hopefully there will be additional inventory as well and more competition is probably not to their favor,” Neft said.

As for what makes the buyer competitive in this market, Neft said it’s all about being well prepared and organized. 

And his general rule of thumb is for how much money someone should be making to afford their home.

“To try to keep it at or under about 35% of your household gross monthly income,” Neft said.

As far as interest rates subsiding this year, Neft said inflation can be a tricky thing.  

“Probably summer, probably June before the Federal Reserve seriously looks into lessening the rates a bit,” Neft said.

As for Kleinhenz, he’s going to wait it out like many other Ohioans.

“What I’m paying in rent to get an apartment is what I’d be paying on a mortgage elsewhere, but I think I have a much better chance of getting an apartment right now than a house,” Kleinhenz said.