It's no secret that buying a house is tough right now. Homebuyers are facing rising interest rates, low inventory, and still-high prices. Yahoo Finance sat down with both experts and home-seekers to see what the market looks like on the ground. Here's what they had to say:
Higher interest rates have stopped buyers in their tracks
"Generally speaking, buyers are really holding off at the moment for a variety of reasons, including the new interest rates," said Ed Fitz, a real estate agent and partner at The Agency in Los Angeles, "That's changed things dramatically since last spring. Nobody quite knows where the market is going next, whether it's Los Angeles, California or even nationally."
The average 30-year fixed loan currently hovers around 6.5 percent compared to roughly 3.5 percent a year ago. Consequently, the National Association of Realtors recently reported that existing U.S. home sales totaled 5.03 million last year, a 17.8% decline from 2021, the weakest year for home sales since 2014.
"It just came to a grinding halt when interest rates went crazy and now we're just not finding a lot on the market," said Danielle Cohen, who's been searching for a home in Los Angeles with her husband, David Jarvie, for about two years.
Inventory's gotten low
Last week, the National Association of Realtors reported that housing inventory had fallen to 970,000 units in December, down 13.4% the previous month.
"I think a lot of people right now are afraid to list their house, so if they don't have to, they won't," Jarvie added.
Getting pricing right is tough
The sellers who are out in the market have been hesitant to drop their prices. The U.S. is coming off a long expansion in the real estate market, and consumers haven't caught up psychologically. Fitz has been gathering data on this phenomenon through the app he launched called "Domicile: Game of Homes," a sort of "The Price Is Right" game focused on real estate.
Despite the increase in interest rates, home prices have remained consistently high. For instance, the national median existing-home price reached $370,700 in November, up 3.5% from a year ago, according to the National Association of Realtors. This was the 129th consecutive month of year-over-year gains.
"People who aren't actively in the market, who are just guessing the prices... are guessing higher than where the house actually sells," said Fitz. "The mind of the average consumer hasn't caught up to the realities of the market right now."
But there's hope. Jason Oppenheim, who as serves president and founder of The Oppenheim Group, a real estate firm that's featured on Netflix's (NFLX) LA-based reality TV series "Selling Sunset," weighed in on real estate prices going forward.
"In terms of prices, there's gonna be some stability, which is probably healthy for the market," he said. "We don't want the spikes and downs. So I think we're going to see a relatively healthy market over the next few years in real estate as it relates to prices."
Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks.