Hey there future homeowners! If you’ve been on the house-hunting rollercoaster, you know the heartache of losing out on your dream home to a higher bidder. But what if I told you there’s a strategy that could actually work in your favor? Buckle up, because we’re diving into the benefits of buying a home when rates are slightly higher, all while keeping an eye on the inevitable interest rate drop.
Interest Rates Will Drop This Year: So Why Buy Now?!
First things first, let’s talk about the elephant in the room—interest rates. We all love a good bargain, and historically low-interest rates have been the holy grail for some homebuyers in the recent years. However, there’s a flip side to this coin that not everyone considers and is a very real thing: fierce competition. When rates are rock-bottom, every Tom, Dick, Harry, Mary, Marsha, and Sue is gonna be out there, armed with pre-approvals, and bidding wars become the norm.
Now, picture this: slightly higher interest rates than you’ve been used to. Not sky-high compared to the historical average. While it might sound counterintuitive, this scenario can be your golden ticket. Why? Because when rates inch up, the frenzy dies down. Sellers find themselves with fewer suitors, creating a buyer’s market where you can negotiate more comfortably. As a full time realtor myself I felt this immensely this past year. The buyers who were buying were going up against 1 maybe 2 other buyers for homes that had even been sitting on market. This is stark contrast to my experience selling real estate in 2020-2021 when it was normal to receive an upwards of 20 offers on one home. My guess when interest rates drop this year? A total repeat.
Coming Out in the Wash
Those bidding wars I mentioned earlier? Well, they often lead to inflated home prices. When the competition is less cutthroat, you’re more likely to snag a home at a fair market value. Paying a bit more in interest can actually translate to savings on the overall cost of your home. It could even come out in a wash when comparing over paying for the home or over paying in interest.
Moreover, consider the long game. If you secure a home during a period of slightly higher rates, you might be in for a pleasant surprise when interest rates eventually drop. Picture this: as rates go down, the value of your home could go up. You not only avoided the competition, but you also set yourself up for potential equity growth. And remember that thing called refinancing? You should do it when interest rates go down.
Tardy to the Interest Rate Drop Party
In conclusion, playing the real estate game strategically can pay off in the long run. While everyone else is fixated on snagging a deal at the lowest possible rate, you can swoop in, avoid the frenzy, and potentially come out on top when interest rates drop. So instead of being tardy to the party, missing out your dream home, or continuing to be a bump on a log — consider NOW to be a golden opportunity to make your move in the housing market! My digits are below…. Don’t be shy, say hi! : )
This blog post was created by Todd Pivetti, one of Los Angeles’ top Real Estate Agents with The Shelhamer Real Estate Group. Todd is a longtime resident of North East LA, (Los Feliz), and he’s unabashedly obsessed with all things East Side. When he’s not writing blog posts or selling homes he’s volunteering at the LGBT Center or looking for the best new thrift stores.
If you have questions about this blog, or have any Real Estate needs – don’t be shy, say Hi!
323-804-8167
todd@shelhamergroup.com
@NotYourDaddysRealtor (insta)
