Are you one of those individuals who could purchase a home now but are waiting for interest rates to fall? If so, please grant me just a few minutes to explain why you may want to reconsider that strategy. I’ve spent a fair amount of 2023 playing “devil’s advocate” in response to the seemingly constant talk about high interest rates and I’d like to think I’ve become reasonably well versed at doing so. When I’m having a conversation with someone and they give me that classic line, “I’m waiting for interest rates to fall”, I can feel my head verging toward exploding. Why? You ask? Because EVERYONE’s waiting for interest rates to fall!
Due to this reality, allow me to explain what’s likely to happen once interest rates do fall if recent history is any indicator. When the rates fall, and no one knows for certain when that will be, what is likely to occur is the housing market will experience a groundswell of potential buyers. Much like we did when we saw historically low interest rates during Covid. The long and short of what took place when interest rates were so low was we ended up in a scenario where we had more potential buyers (not to mention investors) looking to become homeowners than we had actual homes. Due to such a scenario there were countless instances of multiple buyers placing offers on the same home which resulted in bidding wars and many of them were brutal, particularly for those that were ultimately outbid. Take it from someone who not only worked in this market but bought a home during this time as well. It took an emotional toll.
Fast forward to the present day, interest rate hikes are more common, but we’re not seeing nearly as much of the fierce competition that we did when interest rates were lower. This is because there are fewer people in the market. Many people, as I mentioned earlier, are waiting for rates to fall. What many of those individuals have yet to embrace, and let me preface by saying this solely applies to those who are still in a position to buy despite the rate hikes and not anyone that has unfortunately been priced out of the current market. But for those who are still able to buy and are choosing to wait, I only ask that you consider the strong likelihood that you’re going to find yourself in one of those aforementioned bidding wars which will cause you to have to pay X amount of dollars over what the home is actually being sold for.
My question is—why not save yourself from such potential agony? Yes, interest rates have increased faster than they have since 1970 but due to that reality, homes are now sitting on the market longer, which means there’s more potential to negotiate favorable terms because sellers want to sell! Additionally, many new construction communities are offering more incentives than I’ve ever seen. Just this week a client of mine had their rate bought down, received $15k in closing costs, and got their appliances paid for!
I share this real life example with you to say simply that all is not lost. There are still options despite what mass media (and much of what you may encounter on the internet) may have to say. Once again, I am not denying for a second that rates are high, but what I do see is an increasing acknowledgement by the market, and not just an acknowledgment but an actual response to current interest rates in the form of increased incentives from sellers and builders that are at a potential buyer’s disposal, should they choose to take advantage.
In conclusion, if it's not yet evident, I really enjoy educating and empowering potential buyers with facts or at least a different perspective so that they’re equipped to make informed decisions that are in their and their loved ones best interest. (No pun intended)
If you’re at all curious about your buying options, book. a consultation and let’s talk more!