Do higher interest rates create a homebuyer opportunity?
Terry Jackson of Domicile One Realty,
First of all, I understand how odd this is going to sound….Mortgage rates are up and many KC Metro buyers are saying, “Thanks, but not now”. Fair enough and understandable, but my post today is about seeing an opportunity/strategy within this.
So without regurgitating a bunch of housing data like rates are up, contract prices remain steady, 15-20 percent reduction in closed sales, days on the market are higher (you knew I was going to do it anyway)…what does this mean for buyers and is there any option for them or at least a different way of looking at it?
Less Competition: Higher interest rates have put enough buyers on the sidelines to tap the brakes on purchase prices. With fewer buyers offering, not as many to compete with in multiple offers.
Month after month we are seeing higher days on market. This slower pace allows for 2nd showings, time to think it over, bring Mom/Dad/Friends/ along.
Some buyers are researching adjustable loan products and buy down programs to reduce their rates in the short term. It’s worth talking with several different lenders to see what they offer and get a sense of what your monthly payment and up front costs would be.
With fewer buyers out shopping, you can get better terms on your offer. You can think twice about covering a gap in appraisal, purchasing in it’s present condition, or offering free 30 day occupancy to the seller post close. Buyers were doing this sort of thing just months ago just to have a competitive offer.
Low inventory remains a persistent issue in the housing market. When interest rates start to get a bit lower, the other buyers are going to join in and crowd a market that still won’t have enough homes for sale for those that want them.
So much goes into deciding to purchase a home. How you will finance and cover monthly payments are factors that only the purchaser can decide is right for them. I recommend checking out various lenders and getting real-world numbers. Additionally, you have to ask yourself if you will be in a financial position to refinance down the road to grab a lower rate because you will have to qualify for that new loan all over again. If you feel comfortable that you will be in a good position to refinance, this market might be worth another look.
As always, I’m here to answer any questions that you might have.
For ADA assistance, please email firstname.lastname@example.org. If you experience difficulty in accessing any part of this website, email us, and we will work with you to provide the information you seek through an alternate communication method.