Trump is urging Powell to lower rates, and the Fed chief is going to cave.
Powell will lower the rates.
I guarantee it.
He’s going to lower his Fed rate by 1/4%, and say, “There you go!”
This is 2025, and we’re in Flat City. There is no help coming.
Homes for sale are priced at yesterday’s comps, plus a little mustard. The few that are attractively priced get lost in the shuffle because the buyers assume EVERY house is over-priced. Yet sellers keep waiting for that nuclear family with 2.2 kids to come along and pay all the money.
They aren’t coming, and there’s no relief in sight.
Unfortunately, these conditions will force most to the sidelines.
Casual buyers will wait for the mythical moment in the future when all the stars will align (that’s not coming either), and sellers will want to wait until “the market gets better” – which ain’t happening anytime soon. But inaction is an easier choice for both of them to digest.
If you want to move this year, then you need to create your own solutions.
Whether you are a buyer or seller (or both), there is one solid compromise that helps both sides:
The mortgage-rate buydown.
Sellers should offer to buy down the rate, rather than lower their price.
Neither the buyer nor the seller should believe that lowering the price will make much difference. In the second line above, the $100,000 price reduction only gave the buyer a $200 per month discount. Big whoop.
Buyers need to make a formal offer to the seller that says,
“If you can save me $500 per month, I’ll buy your house”, or
“If you can save me $1,000 per month, I’ll buy your house”.
If the seller is already offering to buydown the rate, then they already expect to pay out – it’s just a matter of how much.
If they only have to pay $45,000 to make the deal on a $2M sale, then they should strongly consider it. It’s also worth considering the $145,000 discount if needed, unless they think there might be two in the bush.
But this is the critical part:
The seller must offer the buydown up front just to send notice to the buyers that they will consider it. The buyers must make a written offer to see what they might actually get.
Without those two, we’re just loitering.
Jim, you sure are speaking directly and in specific terms!
Yes, just like during the frenzy when discussing bidding wars.
It beats, “Do you have any questions?”