Dear Friends,

Often during my day-to-day conversations, I’m asked, “How’s the real estate market?” My response is “It’s never been a better time to buy! Even though the interest rates are higher, you’re not competing with 5 to 10 other offers and our ability to negotiate better terms has significantly increased.” These are just a few reasons to consider buying or selling in 2024 but if you need additional facts please continue reading.

The graphs and charts below, provided by Cole Thimsen, Certified Mortgage Advisor at Fairway Independent Mortgage Corp., supports numerous aspects of why you, your friends and family shouldn’t sit on the sidelines to make your real estate dreams come true!

 

Cole Thimsen

 

It’s likely mortgage rates will decrease in 2024. If inflation continues to dissipate and the economy cools or goes into a recession, mortgage rates will likely continue their recent decrease. Historically, mortgage rates decrease during periods of recession.

 

Decreased mortgage rates will drive more buyer demand. There is a tsunami of potential homebuyers sitting on the sidelines waiting for interest rates to drop. For every 1% interest rates decrease, 5 million more homebuyers will qualify to buy. As interest rates drop, more buyers will flood back into the market, driving home prices even higher.

Home values tend to pull back and are at their lowest during the holiday season and winter months. When there are less homebuyers present and would-be sellers are more motivated, homebuyers have a distinct advantage and more opportunity to negotiate favorable home prices and/or seller-paid closing costs.

Seller-paid closing costs offer a significant benefit to homebuyers. Seller-paid closing costs or “seller concessions” can be used to cover a buyer’s closing costs and/or reduce their interest rate and monthly payments. In addition to lowering a buyer’s interest rate for the life of the loan, they can also be used to fund a Temporary Buydown which offers even lower rates and payments during the first few years of homeownership.

There is a true cost to waiting, especially if currently renting. The example below illustrates the “cost of waiting” based on a $400k purchase, 20% down payment, and a conservative 4% annual appreciation rate. The lost amortization (the principal reduction of the loan) and the home’s annual appreciation equate to roughly $20,000/yr. or $1,666/mo.

With the high likelihood of home prices continuing to climb due to low inventory and even more demand, the next few months present a unique opportunity for buyers to have the upper hand when it comes to negotiating home prices and seller concessions, while facing significantly less competition.