Now is a great time to buy a home! OK, I know what you're thinking: "WHAT?! Now is a great time buy real estate? Are you crazy?" But hear me out. There is method to my madness!
There are many variables that factor into buying a home. Usually the first is price, so that's where I'll start. And let's cut right to the chase: if you're waiting to buy because you think prices are going to come down, you're going to be waiting an awful long time! And by the time that wait is over, prices will have risen high enough to negate any hoped-for price declines.
Consider this year in Lawrence: home prices to date have risen year-over-year by 1.5%. Of course that's a far cry from the 15-20% increases we saw over the past few years. But last time I checked, 1.5% is still a positive number. Despite the rising interest rates (more on that later) and despite all the doom-and-gloom prognosticating, home values have increased in 2023. Low inventory is still the primary market driver. I have seen no indications that this will change anytime soon. Simply put: buy for less today, or more tomorrow!
Next let's get to those pesky interest rates. This is a topic that can make my blood boil, but that's a post for another day! The unfortunate reality is that rates were kept artificially low for far too long, and now they're raising rates too high, too fast. Rapidly rising rates have taken many buyers out of the market. However, this is precisely why you should jump in! There's less competition in the market today than we've seen in years.
But what about those high rates? Shouldn't I wait until they come down? Sure, you could do that. By then, you'll be jumping into the market along with everyone else. Perhaps the biggest frustrations among home buyers of the past 2-3 years has been losing out to another buyer. Even very strong and eager buyers have found themselves beat out by that one buyer who's going over the moon for that particular property. Navigating multiple-offer situations makes navigating interest rates look easy!
And while multiple-offer situations are still out there, there are far fewer than there used to be. Back in 2021 there might be 10 or more offers on a single house. Today that number might be only 2-3. Or the only offer may end up being yours. Making an offer in a less competitive marketplace is a huge advantage. And that advantage is hard to quantify. Once the rates come down, all bets are off. Buyers will flood the market and then prices will steeply increase yet again.
So what solutions are available now to take advantage of today's opportunity? If you're a cash buyer, this is easy. Less competition and not having to worry about interest rates is a luxury that not all buyers share. But we are seeing more cash transactions every year. Some cash buyers seemed leery of getting carried away in multiple-offer situations. Not competing could be reason enough if you can buy with cash. You can always leverage later on when rates do come down.
For those who choose to go the lending route, mortgage lenders are offering creative solutions. Seller participation in rate buy-downs are becoming increasingly popular. Banks seem to be warm to the idea because they expect that rates will indeed come down in the future, and buy-downs represent an amount of guarantee up front. Others are still offering no-fee refinancing when rates come down. One way or the other, most lenders are coming up with ways to make buying easier for the time-being. Smart buyers should be talking with their lender right now to discuss the options available to them!
And it should also go without saying, that interest rates are nowhere near the highs seen in the 1980's. Look I get it, that's no consolation. Rates of 7-8% are a tough pill to swallow. But it sure as heck beats paying rent! The Fall Market is also usually a great time to take advantage of buying. The buying seasons are driven in part by the rental season. Many buyers who missed out in the Spring have re-signed a lease and they won't re-enter the market until early 2024. Fewer buyers means greater opportunity!
I think right now is a great time to buy a home in Lawrence. And I can almost assuredly promise that it's not going to get easier. Whether the hurdle is rising rates, rising values, or low inventory, you're going to have to jump through some sort of hoop to make it happen. But for those buyers will creativity and patience, the opportunity to get what you want is now. Take it!
