Houston's housing market is getting pricey as mortgage rates lock in at record numbers, data shows

HOUSTON, Texas (KTRK) -- Mortgage rates are the highest they've been in more than 20 years, according to a federal home loan mortgage corporation, Freddie Mac.

The average 30-year fixed mortgage rate was below 3% for much of 2020 and 2021. In October, rates hit 7.79%, and it hasn't been that high since 2000.

Kyle Alexander, a real estate advisor with Engel & Volkers Houston, said many are apprehensive about moving because they do not want to lose the low rates they are locked into. He said that is also limiting supply.

"We don't have a lot in inventory. People aren't able to move around a lot. People start getting uncomfortable. That price point starts creeping up, and so, something has to give," Alexander said.

Alexander pulled numbers for a $350,000 home, which is near the median price for a house in Houston.

"If a homebuyer were to buy their house likely around 2020, they could have expected a total payment of around $2,036, that is with an interest rate that's just around 3%. That same exact house today might set them back around $2,829," Alexander said.

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ABC13 asked David Zhang, an assistant professor of finance at Rice University, if it makes sense to move in the current market.

"If you don't think that rates are coming down any time soon and you need to buy a home for a family, it may not really make sense to wait," Zhang said.

Alexander emphasized that prospective buyers should not bank on refinancing in a few years. So, the bottom line is if you can't afford a home at its current price, don't pull the trigger. It is unlikely the market will see substantial changes for years.

If you must move, Zhang suggests you "try to find an assumable mortgage. So, for example, if you have an FHA or VA loan, you can sometimes transfer that to the buyer, and that gets around this problem a little bit."

Alexander said he sees clients also utilizing rate buydown programs, especially with new builds.

"Builders are willing to offer credits towards reducing that rate within the first two or three years of the homebuyer's life of the loan. We're seeing the same thing happen with resale houses, too. Sellers are a little more comfortable doing that because we are just at the end of that kind of peak that we just experienced, so a lot of people have a lot of equity in that house so they're willing to contribute a little bit more toward the buyer to get that rate to go down," Alexander said.

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