"The question is: When are mortgage rates low enough for current homeowners to make a move? While the current rate helps first-time buyers, it might be a big shrug for repeat buyers, as they are locked into ultra-low-rate mortgages that we will not see again."
-Dr. Jessica Lautz, NAR Deputy Chief Economist and Vice President of Research
Welcome to our first Quote of the Week post! For this first post I'm going to quote one of my favorite people in the world of real estate research, Dr. Jessica Lautz. I was lucky enough to meet Jessica back in 2020 when I served as President of the Lawrence Board of Realtors. Dr. Jessica represents a wealth of knowledge and insight into stats and trends in home buying and selling activity in the US. So it's only fitting that for my first of many quote of the week posts comes via her latest take on the effect of dropping interest rates.
In these posts I intend to be brief. I'll give a quote and then reflect on it as it applies to our local market here in Lawrence, KS. Mortgage rates are a hot topic in Lawrence today, along with rising home values and rising taxes. While values and taxes seem to just keep climbing, for now it appears that rates may finally be coming down.
This presents an interesting dilemma. Many buyers who have been sitting on the fence waiting for rates to come down are not necessarily jumping off the fence and into the market just yet. Many seem to be in a wait-and-see pattern, in hopes of further declines. However, I am cautioning anyone who will listen: as soon as the rates come down to get enough folks off the fence, the market will respond with swift increases in buyer competition and steep rises in home values.
My advice for the week is this: take advantage now! Rates have come down. Get into the market now and buy before everyone else jumps in. This is still a Seller's Market. Even with fewer buyers around, the buyers that remain in the market, for whatever reason, are serious buyers. The time to buy is now before rates come down far enough to overheat prices in the marketplace.
Right now, it doesn't seem that the rates have declined far enough to start shaking out the "lock-in effect" of home sellers staying put in order to hold on to a lower rate and payment. This should occur when rates fall below 6.0%. Right now they're in the middle 6's. They will not drop below 6.0% this year, but if they do in 2025, watch out: The market may get too hot to handle!
Original quote appeared in this article: Instant Reaction: Mortgage Rates, August 29, 2024
-Ryan Desch, Broker/Owner R+K Real Estate Solutions / Regional Vice President Kansas Association of Realtors
