Robert Breyley
With all the excitement toward the end of last year around the Federal reserve pausing rate hikes and some assuming the potential of rate cuts instead, it was only natural for most professionals to start predicting that mortgage interests would start falling as well. For a moment, interest rates even shadowed that prediction with some borrowers getting as low as 6.4% in the past month! So why are rates back up to 7%? What is stopping the Fed from establishing any future rate cuts? These questions are the largest concerns most real estate buyers and sellers have which are keeping them from entering the market. What most don’t realize is that these concerns might also be a reason some should enter the market and best utilize their circumstance!
Even though we all wish the housing market was the Fed’s biggest priority, most professionals argue that their current focus is more on jobless claims and inflation. When reviewing the trends in these two areas, we can foresee some promise. The latest news from “the DOL jobless claims” shows data hitting a 5-week low of 12,000 from 213,000 in the prior week. Although promising, this still might not be enough to cause the Fed to pivot. They seemed quite adamant about not lowering rates after the latest release of the Fed minutes of the Jan. 30-31 session. As well as the Inflation rates spike in January’s data release from “The US Inflation Calculator”. With no promise of a pivot to lower mortgage rates yet, this could still be a potential to some thinking about entering the market. For property owners that have all or very high equity, you could use this to your advantage. Attempting to sell your property right now could get a competitive top value being that inventory is so low. Simply having a product with such high demand vs such low inventory give you instant advantage. After selling your property for such a high value, turn that equity around to re-invest in another property. Having the cash to purchase vs a loan will give you competitive over any other offer with loan contingencies. It will also give you a more expansive market of properties that cant sell to majority borrower. (See “The Value & Burdens of Contingencies”). If you’re renting and wish to buy, some factors of this market might be to your advantage. We all know that renting has zero investment value. For renters waiting for the best time to purchase a house, if you have a healthy amount of useable funds in your savings, as well as the ability to get a conventional loan, getting that loan fully underwritten could prove very beneficial in this competitive market. (See “What actually are Pre-Approvals & how to use them”) From the previous data stated, most believe that the spring season is going to be a struggle for buyers. Although, come summer and fall, if rates start to go down and housing prices begin to drop, you will be prepared and ready to dive while everyone else is still tying their shoes. The housing market is never for everyone, but it is important to understand that when most of the housing market is negative, it may be the perfect time to strike!