Why Now Can Be A Strategic Time To Buy
If you listen to the media’s stance on home buying, you’ll hear a lot of pessimism – high rates, low affordability, the slowdown in the housing market, and on and on. But, with the right strategic partnerships in place, now can still be a strategic time to buy if you know where to look and what levers to pull!
When you genuinely assess the data, mortgage rates are actually at historic averages (despite their fast climb this year from historic lows) – but importantly, competition for properties has slowed down. Below, we will discuss some of the reasons why now can still be a great time to buy a home, and the next steps to take if you’re interested in securing a dream home, regardless of the media noise.
TLDR – The too-long, didn’t-read summary:
- Home inventory remains aggressively low; with that kind of limited supply, it’s still a seller’s market
- Buyer demand has cooled because of the hike in mortgage interest rates this year
- Home prices have steadied or lowered slightly with lessening buyer competition
- Savvy buyers are taking advantage of financing options, like buy downs or points, to lower their interest rate – sometimes through a seller credit
- Mortgage rates are forecast to lower again as inflation lessens and the economy rebalances
- We still believe in homeownership as a vehicle to build wealth – whether you rent or own, you still have a housing expense either way. The sooner you begin building equity, the stronger your long-term portfolio!
Home Prices Have Steadied as Buyers Have Slowed
If we reflect on the beginning of this year, the home-buying landscape might as well have been the Wild West. We had an outsized demand for an all-time low inventory, leading to multiple offers, escalating prices, and waiving contingencies daily.
Fast forward to today, and buyers can now take advantage of stabilized, more reliable home prices. According to the latest CAR report, prices of homes have held steady, and houses have stayed on the market for an average of 60 days, offering some reprieve compared to just a few months back.
That’s Great, But What About Rising Mortgage Rates?
It’s true, mortgage interest rates are still rising, however, they’re perfectly workable if you know where to look. The Federal Reserve has been increasing rates rapidly to combat inflation, and the higher they get, the more difficult it can be to afford a home. That said – with the right mortgage strategy, now can be advantageous for buyers to lock in a home while buyer competition has slowed down.
We’re working hand-in-hand with our lending partners to help our clients strategize their home financing options, whether that’s lowering your mortgage interest rate through points up front, buy-down programs, adjustable rate mortgages, or piggyback loans. Buyers with a middle-to-long-term view can always refinance when rates do lower in the marketplace but lock in a preferable home price now.
Additionally, when rates do fall, as is expected within the next few years, we’re preparing for a backlog of demand that will create challenging circumstances for buyers, especially if inventory remains low.
First Time Buyer? You Can Still Benefit
Interestingly, we’re seeing a rebalancing in the market– towards younger shoppers. With the pandemic’s high prices and tough competition, younger shoppers lost out to older — often all-cash — buyers. But now, repeat buyers are pulling back due to rising mortgage interest rates. The result is a rebalanced market that’s working in favor of first-time buyers:
“First-time buyers now appear to be making relative gains as high mortgage interest rates disproportionately encourage current homeowners to stay put,” Zillow Population Scientist Manny Garcia said in the report. The slowed flow of homes onto the market seems to confirm this. And though rising mortgage rates affect all buyers, Garcia said, first-time buyers are likely less deterred since rents are also so high.
No Matter Your Situation, We Will Find You The Best Option
By taking a strategic approach to buying in today’s market and working with a trusted real estate agent or lender, buyers can still gain access to the housing market and achieve their dreams of home ownership. With our strategic partnership, we have a strategy to get you where you want to go.
Let us connect you to our trusted loan partners to discuss options such as:
- Rate buy-down programs with a seller credit
- Paying points upfront to buy down the rate
- Adjustable-rate mortgages (ARMs) – ARMs got a bad reputation during the financial crisis of 2008, but new regulations make them much safer today, with significant discounts
- Shorter term mortgages – About 80% of homebuyers opt for a conventional 30-year fixed-rate mortgage, but that doesn’t mean it’s your only option.
Ready to team up with an expert to get that house of your dreams?