The Time to Buy

Is it a good time to buy?

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.