It’s the middle class that’s going to get the suffering. The poor people are already suffering — Rio Rancho Realtor Matt DeAveiro
Median home-sale prices in Rio Rancho are starting to stabilize, but not without potential longer-term consequences for those who recently managed to buy a home.
The average home-sale price in January was about $351,000. For May, the Multiple Listing Service number on the average home sale price listing was about $370,000. Virtually all listings are quoted using 30-year mortgages.
The interest rate on a 30-year fixed mortgage held at around 4 percent at the tail end of 2021 and into the first month or two in 2022, but gradually crept up to around 5 1/2 percent by early May.
That rate’s projected to hit 6 percent within the next week.
“It knocks you out of buying, that’s the problem,” Rio Rancho Realtor Matt DeAveiro said. “It affects everybody.”
The concerning part is people are already dealing with rising prices on food and gasoline. For those currently renting and eyeing a future home, they’re now dealing with rising rent costs due to inflation. DeAveiro said rent increased 18 to 20 percent from last year.
“What that is doing is, it’s making a little more buyer beware. So, they’re taking a little bit more time to look at more options before they make a decision to buy,” said Russ Plank, asset manager with Red Roan Enterprises in Rio Rancho. “When you go from 4 to 5 1/2 percent, that’s almost $100 more a month on your payment… Inflation isn’t changing, but the interest rate is going up. It’s just going to be a little concerning for a while.”
DeAveiro said the average person should have six months of savings in the bank account in case financial issues arise, and he’s worried gradually paying more on a mortgage and other expenses will add up and affect savings accounts.
“We’ve still got to eat, we’ve still got to pay insurance, and we’ve still got to pay utilities. We’ve got to pay all these things,” DeAveiro said, adding rising utility costs are tied to inflation. “It’s the middle class that’s going to get the suffering. The poor people are already suffering.”
With rising food and gas prices on top of rising home interest rates, people will grow increasingly skeptical when trying to make a decision on a home, Plank said.