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HOUSTON - The Fed just projected three possible interest rate hikes next year to try to curb skyrocketing inflation. That means homebuyers already struggling to buy houses in this hot real estate market will face higher mortgage rates, too.
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That has many wondering whether now is the time to buy? Or could higher rates help bring demand and prices back down?
"I got very depressed. I wanted to give up," said first-time homebuyer Jammie Disanto.
Many homebuyers say they're making offer after offer.
"I cried every time. It was being rejected like they didn’t want me on their team," said Disanto.
But they're repeatedly outbid in this hot real estate market.
"It is impossible because if you’re hitting" a house for $350,000, then you offer $370,000, you're going to get rebutted," said Jason Smith, who is trying to buy a home. "Someone is going to pay $390,000."
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"It's not just the first-time homebuyers. It's the second and third-time homebuyers that are facing that," said realtor Bincy Jacobs with Keller Williams.
Now the Fed projects three interest rate hikes in 2022, the first possibly as soon as March, followed by three more in 2023 and two in 2024.
The National Association of Realtors forecasts two quarter-point hikes next year, and that home prices will continue to climb, but at a slower rate, 5.7%.
"I expect buyers to jump in. I think buyers are already waiting. Many of them got tired in 2021 and now they're just waiting for 2022 to launch," said Jacobs.
That's because buyers could face both higher prices and higher rates.
LendingTree says the same $300,000, 30-year fixed rate mortgage at 3.2%, now costs $1297 a month. At 4% it would cost $1432 a month.
That's $135 more a month, $1620 more a year, and $48,600 more over the life of the loan.
Some experts say that could cool the market off and make it a bit easier to find and buy homes.
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Jacobs says buyers are better off buying while rates are low.
"So for buyers, don't get discouraged. Keep looking. Sooner than later is better," said Jacobs.
For some buyers, like Disanto, it takes the 13th try.
"This is my first home," she said. "I’ve been waiting a long time for this."