Should I Wait for Mortgage Rates to Drop Before I Buy a Home?

Should I wait for interest rates to drop before I buy a home? 

There has been a lot of talk about the Federal Reserve cutting rates in 2024.

Goldman Sachs has predicted there may be as many as five cuts this year, with the first beginning as early as March.

So

If you can expect to get a lower interest rate and more affordable mortgage payment by waiting a few months, is that the best thing to do?

Let's look at some statistics.

From 2020 to the middle of 2022, it was a buying frenzy. Interest rates were low, inventory was low and demand was high. Houses were selling almost as soon as they hit the market. Most homes had multiple offers. Buyers were desperate and offering 10s of thousands of dollars above asking price just to get a house, and home prices soared.

Here's what happened to the median home price:

$234,000: January 2020 (before the pandemic)

$354,000: June 2022

An increase of $120,000 (+51%).

With interest rates so high, many buyers and sellers have been sitting on the sidelines waiting for rates to drop again. What do you think will happen when rates start falling?

You guessed correctly! Buyers will start flooding the market again. And with a lot of homeowners sitting on 2% and 3% interest rates, many won't want to sell, so inventory will probably stay low.

So what should you do?

Having been through a tight market, my advice is, if you are in a position to do so, buy now! You can always refinance when rates start dropping. The cost of doing so is pretty affordable.

You've seen the statistics of what happens when rates drop, demand soars and inventory stays low. If you wait until rates drop, chances are you'll regret that you did. You'll be competing against a LOT more buyers. To get a home in multiple offer situations, it'll cost you significantly more to buy a house, and home prices may rise quickly.

Houston currently has about 3.3 months of inventory (which is historically low, but a lot better than only 1.5 months during the pandemic buying frenzy). Current average days on market is about 56. So it's a lot easier to secure a home now. AND if home prices increase, you will be building equity and patting yourself on the back for buying when you did.

If a 7% interest rate is still causing you hesitation or making a mortgage unaffordable, don't assume buying a home now is beyond reach. You may have other options. I am helping some buyers get rates as low as 4.5%.

So instead of waiting for interest rates to drop, let me use my knowledge and experience to help you make your dreams a reality now. I am here to be your trusted advisor. I treat every transaction as though I were the one buying or selling, and I will tell you honestly if that means waiting or if that means you should act now.

Stay informed and happy house hunting!

Contact me to find out more. I'd love to help.