Lower Rates Are Here

Fed Chair Powell finally indicated today that it is time for rates to be lowered…..and the 10-year bond yield barely budged. The next Fed move is already priced into mortgage rates.

Don’t wait to buy just because you think rates might get better. Buy when you find the right house!

From realtor.com:

In the coming months, we’ll provide regular updates on these homebuyers so you can see how their various strategies pay off, and learn more about how to time your own home search just right.

‘I’ll buy a home once rates fall below 6%’

Homebuyer: Kathi Kendall
Where she’s buying: Scottsdale, AZ, or Gilbert, AZ
Price range: $500,000 to $1 million
How low rates need to go: Below 6%

Her waiting game: Kathi Kendall, 62, who works at a university, wants to sell her current home and buy into a 55-plus community with a golf course and mountain views.

“I am looking for a lifestyle change now that I’m going into retirement and my kids are out of the house,” she says.

Her current home is paid off, with no outstanding mortgage balance. Even so, she explains, “I’m waiting for rates to go down to sell, because lower rates tend to mean higher home prices.”

Once she lists her house, she plans to start looking for a new property immediately, but since she plans to finance her next home purchase, interest rates will continue to affect her choices.

“If the interest rate drops half a point next month, I am going to buy a more modest place,” she says. “If rates drop a full point, I am getting something nicer with a lot of potential to build on its value.”

If Kendall doesn’t find something she loves, however, she plans to wait out the market, put her stuff in storage, and rent a furnished apartment until the time is right.

‘I’m waiting for rates to go below 5%’

Homebuyer: Camille Bradbury
Where she’s buying: Taos, NM
Price range: $300,000 to $450,000
How low rates need to go: 5%

Her waiting game: Camille Bradbury, 39, a director of human resources communications, bought a house in 2021 with a loan at a fixed 3.2% rate. While the rate was great, she purchased right when real estate prices had peaked, paying more than $100,000 over the asking price. To cover this loan, her family gifted her money, which ended up “being messy,” she says.

Now, she’s trying to sell her current home to get out from under her hefty mortgage and pay her family back, boosting her savings by doing side hustles as a consultant. After she sells, she plans to rent until she can afford to get back into the market.

To buy again, Bradbury would like to see rates go below 5%. She realizes she might be waiting for a long time—up to a year or longer—but given the regrets she has with her first home purchase, she wants to proceed with caution.

“I don’t mind waiting,” she says, but adds that she knows not to hold off to the point that a great opportunity passes by.

“The last time, I waited too long and missed out on several great investments in 2020,” she adds.

‘As an investor, I want rates in the low 6% range’

Homebuyer: Yancy Forsythe
Where he’s buying: Kansas City, MO
Price range: $250,000 to $300,000
How low rates need to go: Below 6.25%

His waiting game: Yancy Forsythe, 42, a real estate investor with years of experience buying, selling, flipping, and renting out homes, is hoping to buy his next property soon.

“I’ve been regularly browsing online listings to get a sense of what’s available and to monitor prices,” he says. “I’ve toured a few homes, but I haven’t made any offers yet due to the current rates.”

Although rates are now below 6.5%, he’s “hoping that rates will become more favorable in the near future.”

But he definitely won’t waste much time before getting out there, because he’s “concerned that lower rates will increase competition, making the market even more challenging for us investors.”

‘With rates now under 6.5%, we’re not waiting any longer’

Homebuyers: Jonathan and Jennifer Ross
Where they’re buying: Fort Worth, TX
Price range: $400,000 to $650,000
How low rates need to go: Below 6.5%

Their waiting game: Attorney Jonathan Ross, 47, and Jennifer Ross, 45, a commercial real estate broker, currently live in San Antonio, TX. The married couple have been considering buying a new home for the past half-year, but only recently got serious about their search once rates dipped below 6.5% in August.

“The reason we’ve decided not to wait any longer for rates to decline as of this month is because it’s likely that home prices will increase when interest rates decrease,” Jonathan explains. “I would rather buy now and refinance later to be sure that I can buy at a reasonable price.”

To make sure a refi is possible later on, they’re making sure to shop carefully for a home loan where the costs and restrictions around refinancing are minimal.

https://www.realtor.com/news/trends/waiting-for-interest-rates-to-drop-before-buying-a-house/