There are a lot of economic factors that are affecting people's decisions to buy or sell a home currently, and I want to discuss what the potential costs of waiting are that you should be considering.
So one of the questions we often hear is, interest rates are so high, I want to wait until the rates start to come back down. And a question to ask yourself is, what's the magic interest rate that is going to be the prime time for you to purchase a home?
The thing that I want to mention is also that there are many ways to mitigate or manage the high rate environment. This is not anything new. Interest rates have always fluctuated. In the height of previous years, we had double-digit interest rates above 20%. So this is not unusual, and it's not as bad as I think people like to, and the media especially makes it out to be. So keep it in perspective.
And with every dynamic in the market, there is a counter dynamic, if you will. So with interest rates being higher and less buyers being willing to buy, homes are sitting on the market longer, which can create a lot more opportunity. And what I mean by that is you can seek out sellers that are more willing to negotiate with you to help you to have success in the higher rate environment.
Also, we often say on our team, you marry the home, date the rate. And what that means is you're buying a home for the lifestyle, the conveniences, the comfort and security that that home's going to bring to you and your family. So it's a long-term play. It's a long-term purchase in most cases. The interest rate that you're going to be paying if you are leveraging and financing is very much a short-term play. And so you date the rate and you marry the home. So don't allow something as short-term as an interest rate on a loan to derail your plans to make a move for yourself and for your family.
And we can talk more about that, but that's just something to kind of keep in mind as you're deciding what to do in the current environment. What's the cost of waiting?
The Cost of Waiting
So there's always a cost to every decision that you make. And I think it's financially prudent to think about the pros and cons of each of those decisions.
You might be going out to buy a car and you might want to sit and consider, do I actually need a new car? Do I need a brand new car? How much money am I spending on the car? What is the cumulative effect of spending those dollars now versus having those dollars invested for growth for future needs?
Thinking that way is helpful because oftentimes we make rash financial decisions not weighing all of the aspects that we have to think about for upcoming events in our lives and commitments that we have.
With the cost of waiting when you're purchasing a home, there are some very significant factors. And right now, one of the biggest things is we just emerged from an environment where there was a lot of buyer competition and not enough inventory of homes. And so what we saw was there were bidding wars on homes, there were multiple offers on just about every property that hit the market. They sold within a few minutes of coming active onto the market. Homes were selling before they came active on the market. It was a tough environment.
So as a buyer, you were just constantly seeing the home that was perfect, that you felt like was the home you wanted, already gone, already spoken for, you lost out. So the thing to consider here is if you're waiting for interest rates to come back to an attractive level and then you reenter the market, there's a really strong probability that all those other buyers that are waiting are going to reenter the market at that time. And guess what? We're going to have that competition again. And it's going to feel like the last three years all over again.
So if you are staying in the market now and willing to look at options to make the interest rate less problematic for you, seller buy-downs, possibly some owner finance options, better purchase price, things like that, and you're willing to marry the home and date the rate, then you may have the opportunity today to get a much better deal than you will when the world opens up again and everybody's coming out in droves trying to buy the same house.
The other thing that happens with supply and demand, when demand is high and supply is low, is prices get pushed up. So again, the best deals are likely out there today and not in the future when rates soften.
Potential Market Decline
Another question that we're often faced with is, is the market going to decline or of course people feeling that they know the market's going to decline? And my answer to that is, I believe we will see a correction and we are starting to see a correction in the market, but I do not foresee any sort of market crash or anything close to it.
Yes, we are headed into a recession, that is evident, and with many recessions that we have gone through in the past, real estate has actually done very well and continued to increase in appreciating value. So I do not believe that there is a significant market decline on the horizon. The economists that we follow and listen to are also mirroring that sentiment that we are not headed for a market crash.
So I want you to rest assured that is not the case. And again, when you think about the cost of waiting, the cost is higher to wait than what it is currently today with the opportunities that are available.
Take Advantage of Opportunities
In a recap, what are your opportunities? Well your opportunities are strong negotiating options because sellers are motivated and homes are not selling quickly. Your opportunities are being able to secure the home that you want without the competition that we have been having in previous years. Your opportunities are getting the best price for the house, possibly finding a seller that is either willing to do a rate buy-down for interest rate reduction or owner finance and you name your rate. There are a lot of opportunities out there in the marketplace right now.
So if you are thinking about making a move for yourself and your family, it is really important to be talking to a team like ours that knows what options could best benefit you. So please don't be scared off by this market and if there's anything at all that we can do for you, I welcome you to give us a call at 352-794-1426.