You may not want to wait too long on home prices coming down

If you’re waiting for home prices to come down or interest rates to improve a bit more; I hope you’ll read an article recently penned by David Stevens: A Reminder: Home Prices Always Rise Over Time | LinkedIn

David has an extensive background in the mortgage industry, including serving as the Assistant Secretary of Housing and Federal Housing Commissioner for the United States Department of Housing and Urban Development (HUD).

From his article:

“So as we head into 2023, my theme is this: Betting on housing is a losers game. Stop wondering what will happen in the next six months and look at this market as the opportunity that it is. For the first time in many years potential homebuyers can now bargain a bit for their purchase. And yes, some markets still are too hot and remain a sellers market, while others are softer and pose options for buyers. But make no mistake about it, this market is on the verge of recovery….”

In our current market, more Sellers are contributing towards closing costs. Many sellers are willing to pay for interest rate buydowns to help either temporarily or permanently reduce a homebuyer’s mortgage payment. Price reductions are also on the table.

“…this may be the one and only window for the next few years to get into a buyers market. And remember… the Federal Reserve data shows….home prices only go up and always recover from recessions no matter how mild or severe.”

The article (linked above) includes a graphic showing how home prices increase following a recession.

Something I like to remind my clients is that if you find “the home” that you want for your own and you can afford it, consider getting preapproved and making an offer on the home. We are still dealing with an inventory shortage – simply put, there are more people wanting to buy homes than homes that are available to buy.

What about mortgage rates? As inflation continues to show (slow) progress, mortgage rates should continue to improve. Fannie Mae’s latest forecast (from December 2022) estimates that mortgage rates could be in the mid-5’s by 2024. A buyer in this market could potentially negotiate a temporary or permanent interest rate reduction (via a buy-down) that would be paid for by the seller. I STRONGLY recommend reviewing different options with a mortgage professional, including comparing a price reduction, temporary or permanent buydown to see which scenario works best for you. Should inflation continue to tame, you may be able to refinance to a lower interest rate in a few years. I probably would not hold my breath for rates in the 4’s.

So get preapproved! Make an offer on your dream home and just know that the mortgage you use to purchase your home may be temporary until you refinance to a lower rate. (This is actually more of a “normal” process than what we’ve experienced these last few years).

I am happy to review your scenario with you – even if you’re not planning on buying for a while. 🙂

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