When you’re ready to embark on the homebuying journey, timing can be a crucial factor. At Two Door Group, we understand the importance of this decision, which is why we always start our client relationships with a thorough kickoff meeting to discuss goals and timelines. While your goals are the compass, your timeline is often the primary driver of our actions. So, when is the right time to buy?

I recall a very embarrassing clip taken from footage recorded of a Buyer Education Webinar I hosted, where I boldly proclaimed: “The right time to buy is NOW!”. Taking such a comment out of context can leave an agent with egg on their face very quickly. It is just not that simple. Allow me to place that sentiment back into context…

Understanding the Housing Market Dynamics

The Data 

Before diving into the complexities, let’s look at the data. Recent NAR analysis shows that lower mortgage rates have made homeownership more accessible to buyers at all income levels. This is especially true for middle- and upper-middle-income earners. However, the affordability gains for higher-income earners are less significant, as they already have access to a larger portion of the housing market.

In addition, the gains from lower mortgage rates could be even larger, as expected rate reductions could encourage more homeowners to sell, thereby increasing the overall housing inventory. As of now, mortgage rates are already over 100 basis points lower than they were at the end of May 2024.

The Logic Behind Home Prices

A lot has been said about the recent mortgage rate drop, so let me reiterate: lower mortgage rates reduce the cost of borrowing, increase purchasing power, and create a sense of a rush to secure a lower rate, all of which tend to drive up housing demand. However, in many areas where housing inventory is already low, this boost in demand can lead to more competition among buyers. 

Enter the dreaded multiple-offer situation. The downside of increased demand is that it also puts upward pressure on home prices as multiple buyers compete for a limited number of homes. A lot of which is not justified by the comparable sales in the neighborhood, but rather the increased cash buyers are willing to pay to the seller to be chosen, like appraisal gap coverage or other cash incentives. In markets with ongoing housing shortages, this price increase can easily offset some of the affordability gains from lower mortgage rates.

So, Is the Time Now?

If you’ve already found a home that fits your needs and budget, there’s no need to wait for another rate cut. “The time is NOW” – in this scenario, for a person in the position and need to purchase, as I so boldly stated in that clip. This may help you avoid increased competition, and you can always refinance if rates drop significantly. Trust me, as a person who has won and lost many offers on behalf of my clients going up against on occasion 10+ very desperate buyers, competition is more expensive than a few basis points on a mortgage.

Conclusion

While market conditions play a significant role in the homebuying process, they shouldn’t be the only factor in your decision. By working with experienced realtors like those at Two Door Group, you can make an informed decision based on your unique circumstances and goals. We’re here to help you navigate the complexities of the housing market and find the right time for you to make your move.

Let's Set Up A Strategy Call

For more information on this topic, simply click here to set up a complimentary strategy call. Let’s see if the time is right for you! 

Be sure to connect with us over on Instagram: TwoDoorGroup | Chicago, IL