If you’re contemplating buying a home and waiting for interest rates to decline, consider seeking insights from those who recently navigated the 2021 real estate market. Chances are, they experienced fierce competition, finding themselves amidst multiple offers, often resulting in paying well above the listing price. In a market with such low interest rates, homes quickly become more expensive and securing the dream home becomes a stroke of luck.
The landscape of 2021’s real estate was a testament to low interest rates paired with an alarmingly low inventory. This combination created what’s known as a seller’s market—a scenario where demand significantly outweighed supply. Consequently, buyers encountered bidding wars, limited choices, and properties flying off the market in record time.
The intensity in the housing market underlined the urgency of making decisions quickly, with little room for hesitation. Waiting for rates to drop could mean missing out on favorable properties or facing even more aggressive competition in the future.
While wanting to wait is certainly understandable, it’s essential to contemplate the bigger picture and what will happen to the inventory when the rates eventually do drop:
- First-time home buyers will restart their search and take one home off the market.
- Move-up buyers will sell their home and purchase another, taking yet another home off the market.
- One home will come on the market, but two will come off, exacerbating the inventory crisis.
My advice? Take advantage of THIS current market while you may not have to pay over asking for your dream home. Work with an experienced agent who will negotiate price, concessions, and other favorable contingencies. Yes, the mortgage rates are currently high, but you shouldn’t worry about being stuck with a higher rate forever, as experts predict that rates will eventually decrease. In the future, you may be able to refinance your mortgage to a lower rate with better terms. While there’s no consensus on when rates will drop (or by how much), they will eventually – offering you an opportunity to save money.
It’s important to keep in mind that interest rates are just one factor in the home-buying process and should not be the sole determinant of your decision. The focus should shift toward understanding personal financial readiness, long-term goals, and the readiness to seize opportunities as they arise. In addition to working with a skilled real estate agent, it’s also a good idea to get pre-approved for a mortgage before beginning your search.
Above all, remember that buying a home is a significant milestone in your life, and it’s essential to approach the process with patience and a level head. With careful planning, the right agent, and a realistic outlook on the market, you can find your dream home in any real estate climate. Trust the process, trust your agent, and trust your gut! I wish everyone a Happy Thanksgiving and to those patient and brave enough to tackle Black Friday, good luck to you! For one last time, until next week.
Eve Leombruno, 2023 MBOR President