Posted October 13, 2022 in Blog / Education
Am I Shopping for a House or an Interest Rate?
Is it still a good time to buy a house?
If you have shopped for a home in the past couple of years you have noticed the increase in home values and lots of aggressive competing offers. The days of finding the perfect house and thinking about it for a day or two is in the rearview mirror…but is it? Statistics show that the housing market has slowed and there is an increase in inventory. Less people are shopping which means less people are making offers. This bodes well for those still looking for ‘the one’.
Mortgage interest rates have increased since January 2022. This undoubtedly has caused some home shoppers to sit on the sidelines and wait for rates to decrease. Some people are forced to wait due to affordability while others can’t stand the thought of a 6-7% interest rate for the next 30 years.
Here’s the good news.
Nearly anyone involved in the mortgage industry forecasts that rates will come back down. The question is… when? Most foresee a substantial rate improvement sometime in early 2023.
Keeping this in mind you need to put the current housing market in perspective. With less competition in the market and more houses… there is less demand. Less demand causes lower prices.
Think about this. All of the homebuyers that are sitting on the sidelines waiting for better rates will rush back into the market when they see rates improve.
What happens to home prices when there are more buyers than houses? The competition for those homes increases and the bidding begins well over asking price.
Is it more challenging to buy a home at the right price when there are 15 people trying to buy the same house or when you have only 2 or 3? Obviously, you have more negotiating power with less interest in the market and less offers.
The price is settled after you close on your contract. That price will never change. However, the interest rate is another story. Understand this. The fixed interest rate is only temporary as you will have an opportunity to refinance at better terms…perhaps as soon as 6-12 months.
Don’t let today’s interest rates prohibit you from buying your next home.