Housing Market Update: What to Know Right Now
If you’re in the market for a new home, chances are you’ve encountered higher prices and limited housing for sale. Luckily there has been an increase in active listings recently, and interest rates have stabilized, however, the market continues to reflect broader economic uncertainty.
Hesitation around major financial decisions is understandable with global conflict impacting energy prices and driving up the cost of living. Rising inflation could also mean that interest rates will not go down in the short term. Despite these challenges, homeownership is still one of the primary pathways to build wealth, and if the numbers are right, making a move can still be a viable investment decision.
Mortgage Rates: Context Matters
• Rates are currently in the mid 6% range.
• That’s still below the 40 year historical average of ~7.5% (per Callahan and Freddie Mac).
• Recent years of unusually low rates reset expectations, making today’s environment feel tougher than it is historically.
That said, the lack of projected rate cuts has real implications. Affordability remains stretched, and housing costs continue to outpace income growth — especially for first time and younger buyers.
Recently married? Graduate college? Or just tired of renting? With a low down payment and flexible income and credit guidelines, you’ll get into the home of your dreams in no time with BCU’s First-Time Homebuyer Program. Learn more.
Renting vs. Buying: A More Flexible Mindset
The rent vs. buy decision is more nuanced than it used to be:
• Renting can offer flexibility during uncertain economic periods
• Buying may still support long term wealth building for households with stable finances
However, many are viewing homeownership differently: it’s no longer a “forever” decision. Many buyers, especially first-timers, stay in their first home five to seven years, then move as income and family needs grow. This shift has increased interest in Adjustable-Rate Mortgages (ARMs). Features include:
• The interest rate changes periodically over the life of the loan, unlike a fixed-rate mortgage, which has a constant interest rate for the entire term.
• The introductory rate is usually lower than a traditional fixed-rate mortgage, making it an attractive option if you know you are not going to stay in the home long term.
• Should needs change or rates become more favorable, refinancing can be an option, prioritizing future flexibility over stretching affordability upfront.
Younger Buyers Face a Growing Gap
Callahan data shows many Gen Z consumers lack confidence and clarity around financial institutions and savings opportunities as well as making major decisions like homeownership*. Like anything, investing time to learn more and planning ahead can create positive outcomes and enhance financial security. Getting started with affordability tight and uncertainty high might seem daunting but building strong habits early matters more than ever:
• Emergency savings. First make sure you are covered for unforeseen expenses like home repair or a job loss. Automate savings any way you can to build up to 3-6 times your monthly expenses. This will be essential as a homeowner.
• Down payment planning. Consider your housing budget and how much you will need for a down payment. Costs can be anywhere from 10-20% of your purchase price, depending on your lender and any first-time homebuyer programs you may qualify for.
• Credit and equity education. The better your credit, the better your rate and on a mortgage, saving you a lot of money over time. Speaking of time, knowing your equity position in your home is key. Your down payment plus your monthly principal payment adds to your equity which can be used as a down payment for your next home or borrowed against for emergencies / home improvements.
These steps create options — whether buying a home is the next step or not.
The Bottom Line
Building long term wealth remains the goal when it comes to buying a home, but this isn’t always the right move for everyone. Housing decisions should support financial stability, not compromise it. Whether renting, buying, or waiting, aligning housing choices with overall financial well being is what truly sets households up for success.
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About LMY: Life. Money. You.® (LMY) is the Credit Union's holistic financial well‑being program, designed to help people achieve financial success through digital tools, practical resources, and personalized coaching. More than a program, Life. Money. You.® is a partnership-empowering individuals to build confidence, clarity, and lasting financial freedom.
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