First-time homebuyers are likely to face more industry headwinds as mortgage rates and homeownership costs skyrocket in today’s economy.
Mitch Roschelle, managing director at Madison Ventures+, said “it couldn’t be a worse time of year” as mortgage rates hit their highest level since November.
“The timing is awful,” Roschelle stressed during his appearance on “Varney & Co.” Thursday. “There is a little bit of supply on the market. So, I really feel for those first-time buyers who are hitting the streets right now looking for homes.”
While the average 30-year-fixed rate mortgage sits at 7.375%, Roschelle predicts that rates will “likely” increase.
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Hidden homeownership costs are also being subjected to the wrath of inflation.
“Insurance is a huge issue. Property taxes are going up all over the place. So, these are real costs,” Roschelle stressed.
The real estate expert told host Stuart Varney that homebuyers are not beside themselves as landlords are feeling the heat of rising costs.
“If you own apartments, and you rent them out, you have the same issue with property taxes. You have the same issue with insurance. So, what’s happening? Rents are going up as well,” he explained.
Roschelle said the U.S. is currently in a “price spiral,” arguing that the outlook is “not good” as rents are above 5% year-over-year.
“I think if you’re a parent of Gen Z kids, get used to them living in your house for a while because the prospects of them moving out look pretty grim,” he said.
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As the challenges continue to brew within the housing industry, Roschelle suggested that buyers change their perspective when going into the turbulent market.
“I’m always asked, ‘when’s a good time to buy a home?’ And I still fundamentally believe that prices are going to go up,” he told Varney.
Roschelle went on to add that “it’s not an issue in terms of losing value in the home, but what it will cost you to own the home with higher interest rate costs and higher costs to operate the home.”
“That’s something that people really need to take into account,” he said.
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