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Mortgage rates rise to highest level since May 2020 | Dig In 2 It

The Federal Reserve increased interest rates to deal with inflation. That could drive down the booming demand in the housing market.

GREENSBORO, N.C. — The Federal Reserve warned us of interest rate hikes. Now, we're seeing them.

Mortgage rates reached their highest level since May 2020. 

Rates plummeted during the pandemic as the Fed tried to encourage spending and spur an economic recovery. Now that the economy is improving, Federal Reserve Chair Jerome Powell said he planned to raise interest rates as needed to rein in inflation. 

The housing market got so crazy during the pandemic, some buyers went to the extreme to make sure they got their dream home. 

"Some people are waiving their inspections. People are waiving appraisals," Demond Hammock, a Triad realtor said, "There's a lot of cash flowing. There's a lot of cash offers for $200,000 or $300,000 homes. It's like 'you got beat out by a cash offer.' I'm like 'what?'"

Hammock said some people have even gone as far as buying houses unseen. 

He said buyers don't need to get desperate. They can find help from the City of Greensboro and North Carolina. The Greensboro Homebuyer Down Payment Assistance Program can give qualified buyers up to $10,000. The NC 1st Home Advantage Down Payment offers eligible people up to $8,000. Hammock said in some cases, people can even combine the aid.

Some companies are trying to cash in on the busy market. Realtor Ashauna Harris said people may get cold calls from companies looking to buy their homes. She said it's not a scam. The offers are legit.

However, Harris said people could cost themselves tens of thousands without using a professional. 

"The purpose of a real estate agent is to make sure the sellers get the most amount of money for your home," Harris said. "These companies that are reaching out to you, yes, they will give you an amount of money for your home, but it will not be as much as you would make if you actually put your house on the market."

The hot housing market caused rent prices to increase, too. The pandemic saw house prices soar. Zillow estimated Greensboro's home values jumped nearly 20% between Nov. 2020-Nov. 2021.

The high housing prices discouraged some people to stick with their rental unit rather than buying a house. That limited supply, driving up prices.

Todd McFall, an assistant professor of economics at Wake Forest University, said he expects things to look more normal soon.

"In the next six months, I would be surprised to see conditions in the housing market look like they do now because of credit market tightening " McFall said. "The demand's just going to dry up because there's a fixed number of people looking for those units."

McFall said people looking to build their own homes may continue running into issues because of supply chain bottlenecks sparked by the pandemic. He said the United States' trade partners abroad have been hit hard by omicron surges.

"Their labor supply hasn't been able to recover in the way that ours perhaps has," McFall said "As long as that's going on, there's going to be supply chain problems because you don't have enough workers to do the jobs that we need them to do."