Michigan housing market: Hope on the horizon

Michigan housing market: Hope on the horizon
Published: Jul. 25, 2022 at 10:18 PM EDT|Updated: Jul. 26, 2022 at 12:04 AM EDT
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LANSING, Mich. (WILX) - The U.S. Federal Reserve is expected to raise interest rates again and many are worried what it will do to the housing market.

Some are concerned there could be another crash, like in 2008.

Related: What does the interest rate hike mean for Michigan?

People who are buying homes right now are paying a premium on both prices and interest rates. It’s caused some people to delay purchasing a home. According to Dr. Ayalla Ruvio, a professor at Michigan State University, while things may look bad, there’s hope on the horizon.

“Of course mortgages will be more expensive, because money is more expensive,” Ruvio said. “Prices are still high, so if someone is considering buying a house now, that’s probably the worst time to buy because the prices haven’t come down, but the interest rate is higher.”

Ruvio said in some circumstances, it might actually be beneficial to sell your house, but you might want to consider renting before putting your name on another home.

“Selling your house now and renting is actually very good advice if you can do it. Because you can still get premium on your house and you can wait until prices go down and buy a new house,” Ruvio said.

She said she doesn’t foresee another housing collapse, like the one in 2008. Ruvio said over the last few years, home buyers have had better credit and sufficient income to pay their mortgage, which makes the situations vastly different.

“Even though we want to make a parallel to 2008, the situation is considerably different,” Ruvio said. “Not with regards to the situation of the market as a whole, but really as to the position of the consumer and how strong the consumer is.”

Ruvio said the Dodd-Frank Wall Street Reform and Consumer Protection Act -- which were regulatory measures passed in 2010 in response to the the financial crisis -- has been doing its job of preventing a similar collapse to the one in 2008, so people shouldn’t be too alarmed.

Federal officials already raised benchmark short-term borrowing rates 1.5% this year, the largest increase in nearly three decades.

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