I’m the senior economist for LendingTree. These are the 5 things you need to know about the housing market now

​​Mortgage rates are down from the over-6% highs (see the lowest mortgage rates you may qualify for here), and more houses are seeing price drops. So buyers may be wondering: Is now the time to buy, and if so, what should I know before I do? So as part of our series where we talk to prominent real estate pros about the housing market, we interviewed Jacob Channel, the senior economist for LendingTree. He conducts studies on a wide variety of subjects related to the U.S. housing market, in addition to providing general macroeconomic analysis. Here are his thoughts on the housing market now.

Sellers are losing power

During the pandemic, sellers had a ton of leverage. “Buyers were so plentiful and homes were selling so fast that sellers could get away with things that wouldn’t be acceptable in a regular market, like charging 10% or 20% more for a home than what they paid for it just a few years earlier. Today, that’s changing and sellers are finding that they’ve got to make more concessions in order to sell their homes. This is good news for buyers as it means that they’ll have more wiggle room when it comes to negotiating things like a home’s price or whether or not the seller will pay the buyer’s closing costs,” says Channel.

But buyers may still have affordability challenges

Though rates have fallen from their June highs (when they were over 6%), the general trend since the start of the year is that mortgage rates have risen. “This means that new buyers are likely going to end up spending considerably more on their housing payments than they would have had they bought a home at the start of the year,” says Channel. What’s more, “though the housing market is finally showing some signs of cooling down, prices remain high in much of the country. These high prices, coupled with rising rates, can make housing unaffordable to many, especially lower income and first time buyers,” says Channel.

See the lowest mortgage rates you can get here.

Adjustable-rate mortgages are making a comeback — but know the caveats before you dive in

Channel says, “Owing in large part to rates rising so quickly this year, adjustable-rate mortgages (ARMs) have started to become more popular. In fact, the number of ARMs offered to borrowers has more than tripled since 2021.”

Because ARMs typically offer lower introductory rates than their fixed-rate counterparts do, they can seem like a good option to some buyers. Unfortunately, ARMs are risky, and they can quickly become more expensive as rates rise. “Though today’s borrowers are generally better equipped to deal with ARMs than they were prior to the 2007-2008 housing crash, meaning ARMs probably won’t help create another crash anytime soon, buyers should still be sure that they’re aware of the all the potential downsides to an ARM before they rush out to get one,” Channel says.

You probably don’t need to panic about a huge housing market decline

When home prices rise as quickly as they have over the past two-and-a-half years, it’s only natural for people to ask if the record price growth will turn into an equally spectacular decline. “Home prices rose dramatically prior to the great recession and then they cratered. Though nobody can predict the future and say with 100% certainty that everything will be A-OK, the current data that we do have indicates that a 2007-2008-style crash probably isn’t in the cards. Even if home prices do come down in some areas, people today are in a much better place to handle their mortgage payments than they were 15 years ago. This means we’re unlikely to see the same kind of defaulting action that we saw prior to the Great Recession,” he says.

Bottom line: “New buyers and current owners should be careful that they’re not biting off more than they can chew and that they’re keeping up with their payments, but they shouldn’t be using sleep over fears that they’ll wake up tomorrow to find the entire housing market in shambles,” says Channel.