Prices are finally dropping in one of the nation's most expensive housing markets. But as interest rates rise, home affordability is changing more slowly.
"You're either gonna have to pay more for that house because the loan is going to cost more, or you're gonna have to downsize the kind of house that you want," said Michelle Singletary, author of "What To Do With Your Money When Crisis Hits."
Some experts are urging first-time buyers especially to wait.
"I think right now is an opportunity for the market to settle back down a little bit, although still a great seller’s market," said David Hall, a mortgage lender.
Experts and forecasters see a cooling market in some cities and a scale tipping more in the buyer’s direction. But we're not headed for a nationwide market crash.
"This is not a situation where it's going to drastically drop in price," said realtor Sindy Ready. "They'll be small corrections."
Sellers are slashing asking prices out west, where home prices reached some of the highest levels in the country amid the boom earlier this year. In southern California, the median home price dropped more than 1% in July — now $20,000 off its spring peak, according to real estate firm DQNews.
"Somebody who's not a cash buyer may actually be able to buy a house, so from a buyer's perspective, it's a good time to get in the market," Ready said.
As sellers try to take advantage of the last of the seller’s market, they’re improving inventory for buyers, helping to speed up the cool down.
Now, the Federal Reserve is eyeing another interest rate hike next month.
"Date the rate, marry the house," said Frank Fuentes, loan officer at New American Funding. "Purchase your home, and you're gonna have the opportunity, whether it's in six months or a year or a year and a half, to refinance and lower your interest rate back down."
Another hike could make homes more expensive for borrowers, but it could also help keep the cool going down.