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So, by now everyone is pretty aware that interest rates have risen from their lows of a year ago and now, depending on the week, a 30 year fixed interest rate might hover in the 7% range. Great…..! But, there isn’t a lot of talk about home prices coming down in a drastic fashion.

One major reason would be supply and demand. One might expect that because of the current interest rates that you might see a significant drop in home prices, but the truth is that in our current market we are way below what would be considered a “normal” amount of available homes ….. and, our low inventory is on Par with the amount of buyers currently in the market. So…. Supply and demand is keeping the price of homes pretty steady.

What does this mean for buyers? As a Buyer you now have moment to make a decision, you are not competing with 30 other buyers for the same home and sellers are willing to provide concessions to assist you with the purchase. Because of this we find ourselves in what might be considered a normal market of supply and demand where buyers can negotiate.

Here are some WINS in todays market.

1. Buy on your time frame, not the markets or the buyers, it also means that as a buyer you have a bit more leverage when it comes to negotiating for concessions. Right now, many contracts include concessions from sellers that buyers are using to lower the interest rate on their new loan. So, although the market rate is in the 7’s most loans are written with interest rates in the 6% range and if you use the temporary buydown you could see your payment calculated in the 4% range. So savvy buyers are taking advantage of a more normal market and making it work for them.
2. Increase in equity. Once interest rates drop, we expect to be back into a “Sellers Market” and expect to see a rise in home prices as many buyers compete for a limited number of homes. Market time decreased, available homes couldn’t keep up with demand and prices soared! We witnessed this situation over the last several years and every indication is we will be in the very same situation. Those who purchase in todays market and refinance during a “Sellers Market” can then take advantage of the increase in equity and lower interest rates. Further, those that put minimum down could see that refinance eliminate mortgage insurance as well.
3. Keep in mind those who purchased homes in 2021 and 2022 many times paid more for the home and had to make a decision on the spot because if you didn’t there were 20 other buyers in line for the same home. Again, we just don’t have the inventory and for the foreseeable future that isn’t going to change much. Those who purchase today get to take advantage of the future drop in rates as well as the increase in equity and can do it on their time avoiding what could be a very competitive purchase market.

Just some food for thought, if you have any questions please reach out to us.

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“This is the most uncertain time we’ve had in terms of understanding the underlying inflationary dynamics. So I’m having to let inflation guide me and I think we’re letting inflation guide us. It may be that we have to go north of 6%” on the fed funds rate, he said. “If the banking stresses start to bring inflation down for us, then maybe … we’re getting closer to being done. I just don’t know right now.”

• Neal Kashkari, Minneapolis Federal Reserve President

*Just for reference, The Fed’s benchmark funds rate is currently set in a target range between 5%-5.25%.

Lets see what Tuesdays PMI and Fridays PCE reports look like. But, based on the recent reports not expecting any surprises. So I guess, expect to see rates continuing to rise in the near future.

INVESTMNENT PROPERTIES

Private money loans. Does your buyer need to close fast, no appraisal, no qualifying? We have private money loans available to purchase, refinance and remodel investment properties. Good rates, low fees, ready to move quick!

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The current CPI numbers that came out this morning showed M/M readings on PAR with expectations and the previous month, Y/Y readings also met forecasts but showed a small drop in inflation which may help keep the Fed from continuing their path on rate increases. If you have buyers sitting on the sidelines waiting for a good time….. now might be it. With rates possibly cooling down, we could see the market start to get hot again. 

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Borrowers who fall under the 80% AMI for a certain area will not face any LLPA’s, ( Loan Level Price Adjustments ). Instead, those that make more than 80% of the median AMI for a given area will have to pay those LLPA’s and not just the regular LLPA’s that we have always had, these will be increasing to make up for the LLPA’s that will no longer be charged to those whose income fall under the 80% AMI threshold.

Sharifa A. Anderson is Fannie Mae’s Senior Vice President and Chief Diversity and Inclusion (D&I) Officer. She leads a function that works collaboratively across the company to advance diversity, equity and inclusion. At FHLBank Pittsburgh her focused on driving diversity, equity and inclusion and supporting housing finance and community investment. As well as the Pennsylvania Bankers Association, where she has served on the Board of Directors and the association’s Diversity, Equity, and Inclusion Advisory Group. https://www.fanniemae.com/about-us/fannie-mae-leadership-team/sharifa-anderson

The term, Equality, “equality” in housing, “equality” in lending has basically been erased and replaced with the term Equity. It’s now about Equity in home ownership, its about those that “have”, paying for others. It’s unfortunate, but both FNMA and Freddie Mac are fully focused on this.

Is it fair? NO, no its not. Is iit’sight? Nope! Is it going to help those that need it most? Nope, won’t do that either. What it will do is make it more expensive for many to purchase while they supplement the buyer power of others. There is a word for this: Redistribution.

This all starts May 1^st.

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If you are interested to know more, please reach out to me and if you would like the form used to calculate exactly how much the buydown will cost a seller, please email me and I can forward you the form.

Have a great day!
Scott

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Realtors:

Self-employed borrowers can have a challenging time qualifying for a traditional home loan. But you don’t have to worry about there not being a program available for your client to qualify for a mortgage. Bank Statement programs are designed specifically for those who do not have the tax documents,W-2’s, or adequate proof of income that clearly indicates their ability to pay. Give your borrower the good news that the home that seemed out of reach can now be a reality.

Contact me today for a customized mortgage solution that best fits your circumstances.
Borrowers:

Self-employed borrowers can have a challenging time qualifying for a traditional home loan. But you do not have to worry about there not being a program available to help you qualify for a mortgage. Bank Statement programs are designed specifically for those who do not have the tax documents, W-2’s,or adequate proof of income that clearly indicates their ability to pay. The home that seemed out of reach can now be a reality!

Contact me today for a customized mortgage solution that best fits your circumstances.

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