Warren Buffett’s Berkshire Hathaway predicts mortgage rates changes will stir housing market | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Homebuyers have navigated an unpredictable housing market over the past few year, experiencing rising home prices and stubborn mortgage rates. Many young Americans have chosen to delay homeownership until affordability improves, and some have given up on the idea entirely.

Despite Covid-related uncertainty during 2020 and 2021, mortgage rates hit historical lows below 3%, prompting many buyers to take advantage of a more accessible housing market. The early pandemic housing boom raised housing prices and was followed by intensified inflation in 2022, which pushed housing costs up even further.

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Now, as mortgage rates continue edging closer to 7%, expectations for a strong summer market rebound have cooled. Homebuyers value affordable housing options now more than ever, especially as mortgage rates fluctuate.

While the outlook for the rest of the year is uncertain, experts suggest that homebuyers will remain hesitant, despite increased bargaining power.

Berkshire Hathaway HomeServices highlights that homebuyer demand will continue to shift as mortgage rates fluctuate. The one constant is that buyers are seeking affordable housing options as the cost of living rises — and are willing to hold out until the outlook improves.

The housing market has favored sellers for the past few years, but as buyers hold out for lower prices and mortgage rates, they will regain bargaining power.

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Berkshire Hathaway Home Services notes that buyers seek affordable housing above all else

Consumer prices have yet to come down after inflation surged in 2022, making it more difficult for Americans to make ends meet while saving for major financial milestones.

The majority of aspiring homebuyers note that saving for a down payment is a significant barrier to homeownership. To secure a more affordable home, 29% would be willing to downsize, and 24% would be willing to move out of state.

However, despite predictions from Redfin that housing prices will drop by the end of 2025, many find that rising costs and stagnating wages will keep the real cost of homeownership unmanageable.

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The Berkshire Hathaway HomeServices blog notes that affordability is becoming increasingly important for first time buyers, as homeownership becomes more unattainable.

“For most homebuyers, choosing a home comes down to affordability — which may mean compromising on location, size, age, or amenities. Many first-time buyers opt for smaller homes in more affordable markets but still expect them to be in good condition and free from major repair needs.”

Berkshire Hathaway Home Services anticipates more mortgage rate fluctuations this summer

A clear trend has emerged in the wake of constantly fluctuating mortgage rates: homebuyer demand will rise and fall with housing market swings.

The Berkshire Hathaway HomeServices underscores that, “With sky-high home prices, tariff-induced inflation fears and mortgage interest rates escalating, along with recent stock market losses, homebuyers are more cautious.”

Unpredictable mortgage rates aren’t helping restore confidence in the housing market — any progress made in enthusiasm and housing sales is often diminished as rates start to creep back toward 7%.

Citing concerns from the National Association of Realtors, the blog explains that mortgage rates changes, economic uncertainty, and general housing market pessimism will become key factors in shaping market activity.

“Chief Economist Lawrence Yun commented that homebuyers are acutely sensitive to even minor fluctuations in mortgage rates. Homebuyers may add an interesting see-saw effect to summer housing sales, as they jump in or pull back on economic news.”