Read the below article and answer the questions: In this economic climate, is renting still a smart move or are we just paying other peoples mortgages by doing this? How would you advise friends or family when asking for advice in selecting a home loan type? (Assume the person asking would qualify for whatever you advise.) Is now a good time to buy a home? Is now a good time to sell a home?

Buyers, sellers and renters are in for more twists and turns, as soaring mortgage rates and stubborn inflation signal belt tightening ahead. Everyone is feeling the squeeze. "Mortgage rates are sky high, prices are sky high, and there's no inventory," said Mark Zandi, the chief economist at Moody's Analytics. "This may be the worst time in my living history for the home buyer it just doesn't make sense." Mortgage rates recently broke 7 percent, the highest since 2002, and more than double what most borrowers paid near the start of the pandemic. Between soaring prices and rising rates, the typical home buyer in October paid 77 percent more on their loan, per month, than they would have last year, according to Realtor.com. With a national median asking price of $425,000 and a 10 percent down payment, that works out to an additional $1,117 every month. Home contract signings fell for the fourth straight month in September, down 31 percent, compared with September 2021, according to the National Association of Realtors. The same month, search interest in the phrase "U.S. Housing Bubble" reached a 15-year high, according to Google trends data. The searches were most popular in Idaho, where the median home price in Boise was $549,900 an eye-popping 51 percent increase since September 2019, according to Realtor.com. The days of record-low mortgage rates are over, but juiced-up home prices have not fallen in kind. And sales are stalling, as both buyers and sellers wait for the other shoe to drop. To make sense of the current housing market, we spoke with economists, mortgage brokers and real estate agents to plot the course ahead. Much can change, especially with economic headwinds on the horizon, but they all agreed that the market is cooling fast. Home prices are going to drop, just not to the extent some buyers have hoped for. Sellers are going to have to work for their closings again. And renters may finally get a reprieve from surging prices, even as prices stay well above prepandemic levels. How low will home prices go? Most analysts don't expect home prices to free fall as they did after the subprime mortgage crisis in 2008, in part because of stricter underwriting practices, a big bump in home price appreciation and a class of all-cash investors waiting to swoop in when prices dip. But the cuts are coming, analysts said, perhaps as deep as 20 to 30 percent in markets that saw the most appreciation, particularly in the Mountain West region and the South. Still, most homeowners will have gained some equity over the past two years, even after a slide in home values.

Existing home prices soared 45 percent from December 2019 to June 2022, the start of the pandemic to the summer peak in pricing, the biggest jump ever recorded in such a short window of time, according to Standard & Poor's CoreLogic Case-Shiller Home Price Index. In July, the same index recorded its first month-to-month price drop since January 2019, a relatively small decline of 0.3 percent a sign that a reversal could be underway, though prices were still up a whopping 15.8 percent above July 2021. Morgan Stanley, the investment management firm, predicted home prices will fall 7 percent, from the peak of pricing in June 2022 to December 2023. Moody's Analytics expects prices to drop 10 percent, from June to summer 2024, but if a recession hits, an increasingly likely scenario, prices could drop 20 percent. In some supercharged markets, like Boise and Phoenix, Moody's predicts prices could drop by more than 30 percent. Another firm, John Burns Real Estate Consulting predicted in May, when mortgage rates reached 5 percent, that national home prices would fall 10 percent through 2024. But with mortgage rates climbing higher, the cuts will be deeper, said Rick Palacios Jr., the company's director of research. "Affordability was the worst it's ever been, and that was before 7 percent mortgage rates," Mr. Palacios said, adding that the only option for sellers will be to cut prices. Other predictions are less dire. Rick Sharga, an executive vice president of market intelligence at ATTOM, a real estate data company, said he expects prices to fall about 5 percent over the next six to 12 months before stabilizing. "This is about weakness in sales volume, more than sales prices," Mr. Sharga said, adding that the forces that caused prices to plummet after the great recession irresponsible lending and a glut of supply aren't in play. There is very limited inventory for sale, he said, and because the typical homeowner now has a mortgage with a low 3.5 percent interest rate, few would choose to sell today for fear of facing much higher borrowing costs on their next property. "People are in wait-and-see mode, because the numbers don't work out," said Danielle Hale, the chief economist at Realtor.com. Inventory has shot up since the summer, when mortgage rates started to climb, but still remains far below normal levels, Ms. Hale said. Active listings were up nearly 27 percent in September, compared to September 2021, but still 40 percent below September 2019, before the pandemic. While few markets so far have given up price gains from last year, she said, big jumps in supply could be a precursor to price drops. The Phoenix metro area saw prices rise more than 4 percent in September, compared to September 2021, but inventory shot up

167 percent in the same period, the most among the 50 largest metros. It also had the biggest share of homes with price cuts, with two out of every five listings taking a trim an average discount of nearly 8 percent, or about $47,000. What's going on with mortgage rates? Today's rates are far from record territory some loans in 1981 had over 18 percent interest. But in late October, the average 30-year fixed-rate mortgage, the most popular home loan, hit 7.08 percent, more than double the rate that millions of buyers relied on to calculate their budget. This week, the rate dipped slightly to 6.95 percent. In January 2021, the loan sank to a record low 2.65 percent, according to Freddie Mac. The spike in mortgage rates has largely been the result of the Federal Reserve raising the rate at which banks lend to each other, in an effort to cool inflation. The rate hikes tend to drive up the rate of the 10-year treasury note, a close proxy for mortgage costs. The rapid reversal has been head spinning, with the added pressure of surging prices. Tahera Tilson, 44, a nurse educator who was living in New York, bought a one-bedroom condo in Harlem for $399,000 in 2019, with a 3.75 percent mortgage. After two years of isolation in the pandemic, she decided to buy a two-bedroom townhouse in Clifton, N.J., for $425,000, with a 5.25 percent mortgage, and planned to sell the Harlem apartment. But just as she listed the apartment in late spring of this year, the Fed announced plans for more aggressive rate hikes, and mortgage rates soon pushed 6 percent. "I got a lot of traffic, but no offers at all," she said about the listing, which she started at $460,000, but soon dropped to $450,000. "It basically came down to the interest rate that is what was scaring people off." Unable to carry two mortgages at the same time, Ms. Tilson had to change tack, and decided to rent it out instead. In the rental market, which is especially starved for affordable listings, she quickly found a tenant willing to pay $2,500 a month. The median rent in Manhattan was nearly $4,000 in September, according to Douglas Elliman, a real estate brokerage. The Fed raised its benchmark rate by three-quarters of a point this week, its sixth increase this year, and suggested more increases are coming. Lawrence Yun, the chief economist of the National Association of Realtors, said it "may be another year or two" before mortgage rates begin to fall. The Mortgage Bankers Association, a large trade group, has a more optimistic view, with rates for the 30-year fixed mortgage dropping to 5.4 percent by the end of next year.

In the meantime, agents and mortgage brokers have dusted off a prepandemic slogan: "Date the rate, marry the house." In other words, buy the house you can afford now, and refinance when mortgage rates dip. "We've been spoiled 7 percent is not crazy," said Maria Kazakos, the senior vice president of sales at Berkshire Hathaway HomeServices Carolinas Companies. As power shifts to buyers in Charlotte and nearby markets, she said she is seeing requests for the seller to cover the cost of a lender fee, called points, to reduce the buyer's mortgage interest rate. Other buyers are reconsidering adjustable-rate mortgages, or ARMs, a type of loan that drew scrutiny after the subprime mortgage crisis. A 5-1 ARM, for instance, is a 30-year loan with an enticing fixed rate for the first five years, which then resets once a year for the duration of the mortgage, based on the prevailing interest rate and other guidelines. Many are offered with a starting interest rate of around 1 percentage point lower than a 30-year fixed-rate mortgage. Adjustable-rate loans have gone from about 4 percent of the mortgage market in 2021, to more than 12 percent in the last several weeks, the highest share in more than a decade, said Mike Fratantoni, the chief economist at the Mortgage Bankers Association. In 2005, when rates hovered around 5.5 to 6 percent, more than a third of borrowers had adjustable rate loans. The loans, which were widely criticized for saddling borrowers with ballooning debt, are safer today, because of new regulations enacted after the financial crisis, Mr. Fratantoni said. But borrowers can still get in over their heads, if rates are higher when mortgages reset, increasing the overall cost of the loan, said Andrew Pizor, a lawyer with the National Consumer Law Center. He expects lenders to offer even more enticing versions of the adjustable loans in the coming months, as high interest rates slow down the mortgage business. "But just because they say you can afford it, doesn't mean it's a good idea," he said. What can sellers do? A few months ago, sellers were turning down bids that were $100,000 over the asking price, said Jasmine Harris, a real estate agent with Redfin in Atlanta. Now, offers are coming in at, or even below, the list price, and sellers are hearing an unfamiliar word: concessions. "I'm still in the shock of the past two years, so whenever I write an offer and ask for closing costs, I've been holding my breath," she said, referring to the once common practice of sellers paying some of the buyer's transaction fees. "But I've been getting it."

Even in markets where prices have not declined, sellers are becoming more open to sweeteners, agents said, like agreeing to contract contingencies in the case of financing trouble, or offering to pay for loose ends to lubricate the deal. But the best strategy for sellers is to start at the right price, said Steven James, the president and chief executive of Berkshire Hathaway HomeServices New York Properties. He expects prices to come down 5 to 10 percent in Manhattan because of higher mortgage rates, and said sellers should get ahead of the curve, because lingering on the market has risks. "The last thing you want in a shifting market is to have something sit," he said. "The consumers are watching, and they're thinking, 'That one's tainted.'" Are rents finally cooling? There may be some moderate relief for renters, but a return to prepandemic pricing isn't likely, analysts said. After record levels of demand for rental housing in 2021, there has been a significant slowdown in leasing this year, and price growth is also beginning to slow, according to Jay Parsons, the head of economics for RealPage, a rental housing software company. Demand for market-rate rentals in the third quarter was negative, meaning there were more people moving out of apartments than into them the first time this has happened in the typically busy summer months in 30 years, Mr. Parsons said. The slowdown led to the first month-to-month price reduction since December 2020 a measly 0.2 percent drop in September. Still, the national market-rate rent $1,797 a month was up 9 percent from the same month a year ago, in part because inventory remains low. RealPage predicts that national market-rate rent will rise 3.3 percent next year, which is more in line with typical rent growth. That is cold comfort for renters in high-cost markets like New York City, where rent growth outpaced increases in wages by 23 percent in August, when adjusted for inflation, according to Kenny Lee, an economist with StreetEasy, a listing website. Besides the major real estate disruption early in the pandemic, that marks the widest gap since the 2008 financial crisis. The median rent in September, $3,982, was up nearly 24 percent from a year ago, though it was down 2 percent from the previous month, according to a report from Douglas Elliman, a real estate brokerage. Renters could have more leverage in the typically slower winter months, said Jon Leckie, a researcher with Rent, a listing portal.

"If you've got a few months to work with, and you don't need to sign now, I'd just hold off," he said.