For many prospective homebuyers who have remained cautious due to high mortgage rates and affordability issues, now is the perfect time to take action. With rates on a downward trend, the current market presents a golden opportunity for buyers that may not last for long.
If you’ve been keeping your home-buying plans on hold, here’s why you might want to reconsider waiting.
As you ponder the right time to buy, consider this: what will other potential buyers do?
Sweet Spot for Buyers
The reality is, that if mortgage rates continue their downward trend, as predicted by experts, more buyers will seize the opportunity. A recent Bankrate survey reveals that over half of homeowners would be inspired to buy this year if rates fall below 6% (see graph).
With rates already hovering around the low 6%, we’re not too far from this critical marker. The fact is that when rates drop to 5%, we’ll see more buyers entering the market, which means more competition for you.
This increased demand will likely drive home prices up, which could potentially negate the benefits of a lower interest rate. As conveyed by Nadia Evangelou, Senior Economist and Director of Real Estate Research at the National Association of Realtors (NAR):
“The downside of escalated demand is that it leads to an increase in home prices as multiple buyers compete for a limited number of properties. In markets with persistent housing shortages, this price increase can counterbalance the affordability benefits from lower mortgage rates.”
Therefore, while waiting may seem like a strategic move, it could backfire if increasing prices outpace the benefits of lower rates.
The Implications for You
At present, you have the opportunity to get ahead of the curve. The current market represents a unique window for buyers. Why? Because many other buyers are still waiting, there are fewer people actively seeking homes, resulting in less competition for you.
Plus, the affordability factor has seen a significant improvement. A recent decline in mortgage rates has made homeownership more attainable. As noted by Mike Simonsen, Founder of Altos Research:
“Mortgage payments on the median-price home are 7% lower than last year and are 13% lower than the peak in May 2024.”
While the supply of homes for sale remains low, it’s higher than it’s been in recent years. As pointed out by Ralph McLaughlin, Senior Economist at Realtor.com:
“The number of homes actively for sale continues to grow compared with last year, increasing by 35.8%, which marks the 10th consecutive month of growth, and is now at the highest since May 2020.”
This gives you more options to select from than you’ve had in a long time. With fewer buyers in the market, increased affordability, and a greater selection of homes, you stand a better chance of finding the perfect home before the competition escalates.
The Cost of Delay
If you’re waiting for that perfect moment to buy a house, bear in mind that timing the market is nearly impossible. The longer you wait, the higher the risk of unfavorable shifts in the market. As Greg McBride, Chief Financial Analyst at Bankrate, advises:
“Be careful what you wish for. A further drop in mortgage rates could bring a surge of demand that makes it tougher to actually buy a house.”
The Bottom Line
Don’t risk facing increased competition and rising prices—seize the chance to buy a home now while we’re in the golden period. Let’s connect to ensure you’re making the most of this opportunity.
Source: mykcm.com
