In the many conversations that I've had over the past year regarding the real estate market, many people have expressed concern about an impending crash, or decided that they are going to hold off on buying until it crashes. However, despite endless mortgage rate hikes and global volatility, the market is still doing fine. Apart from a correction from the blistering hot market of Spring 2022, home prices have not come crashing down. Why is this? INVENTORY - or the lack thereof. Inventory remains low and North Idaho continues to be a location desired by many people.
And what about those mortgage rates? Desmond Parisotto from CMG Home Loans has this to say, "It seems unlikely that the Fed will look to hike again. Historically, rate cuts from the Fed come 10 months after the last rate hike, which occurred in July. This would put us on track to see the first cut around May of 2024. Fed Futures are currently predicting four cuts in 2024, which if this occurs would obviously be huge for mortgage rates!"
In a market that was not murdered by endless rate hikes, rate cuts could really light a fire. This could potentially make buying very difficult again and put buyers in a less favorable position for negotiations. In other words, if this does turn into a hot Seller's Market due to rate drops, the seller will be able to dictate a lot of what happens at the negotiation table and buyers will be disadvantaged. For this reason, if you or someone you know is waiting for rates to drop before purchasing a home, here is something to consider - If you can buy a home at today's rates and be comfortable with the payment, you might have more negotiating power and secure the home at a better price now than if you wait. If you buy now and rates do drop, you might be able to refinance to that lower rate. Some lenders, including Desmond at CMG, are offering programs where you will be able to refinance with almost no lender fees, and you can do this if rates drop any time over the next 5 years!
While I don't have a crystal ball, and I am always cautious about making predictions, the current data seems to indicate that this market is not in danger of crashing any time soon, and data supports the idea that we might see the market get hot again. What are your thoughts?