By Serjik "Serj" Markarian, Licensed Real Estate Salesperson
As we continue the ongoing narrative of declining mortgage rates, it's important to consider the potential impact on home prices. While the prospect of more manageable mortgage rates is certainly encouraging (with the caveat that it's a current trend), it's noteworthy that this often coincides with an upward movement in home prices. In most cases, there exists an inverse relationship between rates and home prices.
When mortgage rates are low, buyers find themselves with more purchasing power, leading to a surge in home prices. In fact, the recent drop in rates is drawing more buyers back to the market. Obviously, inventory will also impact prices, but currently it remains tight, as sellers haven’t been willing to part with the exceptionally low interest rates that they secured a few years ago. Considering this, prices could continue to rise into the upcoming Spring market.
A housing expert says home prices could jump 7 percent this year due to a boost in buyer demand fueled by falling mortgage rates. While we often approach expert predictions with caution, this particular individual accurately foresaw the trends in 2023. Even if prices don’t rise substantially, it's reasonable to anticipate them to remain stable, with limited room for discounts, especially if the inventory remains constrained.
For those who have been considering buying this year, this begs the question, “Is NOW the right time to buy?” It’s a question worth serious consideration, given the likelihood of potential price spikes as demand escalates and we head into the most active time of the year—the Spring market—only two months away. A senior loan officer highlights that the biggest challenge for prospective buyers will be the surge in demand, noting that a substantial segment of potential buyers, who have been on the sidelines, are poised to enter the market.
It's also worth noting that winter usually sees fewer buyers because people generally don’t want to venture out in the bitterly cold weather looking at homes. However, if you can get past that to avoid the spring rush when prices may be higher, now is the time to start shopping. U.S. News & World Report did a good job of laying out various scenarios to help you determine whether now is the time to buy or should you wait.
I think it’s also important to add that despite the recent decline in mortgage rates, their trajectory can be influenced by the strength of the economy, inflation, and the uncertainties associated with an election year. Given the multitude of factors at play, staying informed about market developments is essential. Collaborating with a trusted real estate broker becomes even more valuable in navigating these complexities. Should you have any questions, feel free to reach out—I'm more than willing to get on a call with no obligation to work together.
