The real estate market has been strong for quite a while. Demand has been red hot, and interest rates have been low, creating many opportunities for sellers. That has started to cool over the past year as interest rates rise to combat inflation across the country. Many people are considering whether right now is the right time to buy or wait for the market to bottom out. However, now could be the best time to buy, and here’s why.
Here are the four main reasons it could be a good buyer’s market.
Home Prices Are Not Going to Bottom Out
As interest rates increase, much of the demand has started to disappear. While many markets still need more homes for the number of people wanting to live there, those that own homes are no longer in the market. Someone with a 3% mortgage may not find it wise to trade that in for a 6% or even 7% mortgage.
The current market, combined with the Fed likely increasing rates again this year, may cause you to think that home prices will continue to drop and that you can wait for the best deal. However, demand for people who still want to own a home should stay strong due to the shortage. This will likely stop home prices from bottoming out, and prices should remain fairly constant throughout the year. This makes it an excellent opportunity to start looking for your next home.
Good Rates Are Available to the Right Buyer
Potential buyers who currently have a mortgage and are paying a low-interest rate aren’t going to be excited about selling and getting a new mortgage with a much higher rate. However, there are still good mortgage opportunities out there for strong borrowers and first-time home buyers.
Many first-time home buyers still find great 5% or less rates with favorable 30-year terms. That is a few points lower than the usual market and could be the best rate borrowers will see for a while. According to the Fed, this makes it a good time to buy as rates are expected to go up again. Waiting could cost you money instead of helping you save.
Many Borrowers Are Financially Ready
The pandemic saw many people get access to large amounts of money through COVID-19 tax breaks and stimulus payments, and some were able to save. Some even put that money away and earmarked it for a potential house purchase. That’s more money than the same borrower would have had otherwise, putting them in a better financial position to buy a home.
The pandemic also helped many get their finances in order by paying down debt, which helped to improve their credit scores. This can help the same borrower qualify for a better mortgage rate than they would have in previous years. As the market starts to slant more and more to being a buyer’s market, this is the perfect time to be in that financial position.
Sellers Are Willing to Negotiate
Another good reason to buy right now is that sellers are more motivated, making them more likely to negotiate. People selling their houses are seeing less success than others have seen in the past few years as the demand has decreased. This means that sellers are more likely to negotiate the price of the home, what stays with the house, or other terms of the sales agreement that might be important to you.
During the height of the real estate boom over the past few years, the real estate market was tough for buyers. Many would come in with an offer at the asking price and get outbid by someone who offered more money, or they were denied if they tried to negotiate anything. Sellers didn’t have to give in to many items or negotiate because many buyers were competing for their homes. Now, though, things have changed. Buyers are starting to have power again.
The Bottom Line
Buying a house this year might be the right financial decision. If you’re considering buying, you should research your finances before moving forward. If you end up waiting to buy, hoping prices come down, and they don’t, you may cost yourself money. Instead, be aggressive and get the terms that most suit your needs.
Infinity Credit Union knows the Maine real estate market. We aim to help our members find the right mortgage that can help them get into their dream homes. Our personalized service helps you through every step of the process and gets you on the right track.