In the hit Netflix (NFLX) reality series Selling Sunset, celebrity real estate agent Jason Oppenheim leads a team of glamorous realtors to sell homes to Los Angeles’ elite.
But with rising interest rates, the consumer elite and others are reluctant to buy (and sell) homes. Recently, the National Association of Realtors reported that last year’s U.S. existing home sales were 5.03 million, down 17.8% from 2021, the worst year for home sales since 2014.
Yahoo Finance’s girlfriend Allie Garfinkle recently sat down with Oppenheim to discuss the current housing market and whether now is a good time to buy.
Maybe so, but it’s complicated. “I think the market probably bottomed out in late 2022 and rates probably peaked out in late 2022, so I’m generally bullish,” Oppenheim said. “But I don’t want to pretend it means the housing market is going up. I think it’s probably going into some kind of homeostasis.”
30-year fixed-rate mortgages rose 6.15% late last week. A year ago, it was about 3.5%.
Oppenheim said higher interest rates will affect everyone but will hit low-income shoppers harder. “Interest rates go far beyond the income bracket, but I think they tend to affect the lower income bracket. …People talk about the affordability of a house. I need to prepare some. It has always been difficult. But now, not only do you have a down payment, you have to pay 5% or 6% interest, even if it’s a five- or 10-year commitment,” he said.
Still, Oppenheim is optimistic about where interest rates will reach over the next few years, and thinks incredibly high-interest rates are unlikely to persist for an extended period.
“I think [interest rates] will go down in the next few years,” he said. “So if someone bought a house and the interest rate was 5% for him, I don’t think it would be a big deal.”
But at the moment, buying is not the one-size-fits-all answer
Oppenheim added that buyers can always refinance their mortgage contracts for several years. He also pointed out the benefits of owning a home rather than renting it for the long term.
“If you can hold the property, you can handle the ups and downs, and you can take advantage of the valuation over 10, 20, preferably 30 years, buying is always better than renting. In that case, buying always makes sense.” I think,” he said. He said.
Still, short-term purchases don’t always make sense, according to Oppenheim.
“There are transaction costs and limited mobility as an owner,” he said. “You have a lot of issues to deal with. A leaky roof is no longer the landlord’s fault, it’s your problem. So if you only want to own it for a few years, you should probably consider renting.”
The emergence of COVID-19 and remote work has pulled people away from big cities and changed the landscape of home buying in those cities, he added. Although some cities are seeing a resurgence, a recent report by the Economic Innovation Group (EIG) found that nearly 70% of his major urban counties had lost their population in 2021.
“You don’t have to live in LA. You don’t have to live in San Francisco. You don’t have to live in New York. You can live in these other cities now,” he said. If we don’t address some of the issues, I think we’re going to be pulled away from some of the big cities.”