I haven’t posted much lately as the news for home buying seemed to always be bad. While it is true interest rates are going up it is not all bad. Here is some information I received from a lender at Bank of Albuquerque. It seemed to make sense to me, so I wanted to pass it on.
The number one question that we are all getting is “Should I buy a home right now or wait?” It’s a very valid question considering what is going on in the market!
Buying a home is very specific to each individuals needs at the time, but the most important key to successful strategy is playing the long-game of home ownership. Timing the market is probably not the best strategy as there are true professions that do this for a living and most people that have to ask Realtors and Lenders if it’s the right time to buy, likely do not fall into the category of professional RE investor.
What is Interest Rate Gridlock?
• Higher interest rates causing people to pause or question buying now
• Current owners that are not selling as they have extremely low rates (i.e. 2.5%, 3.0% etc.)
The Facts: If you listen to the Media, you’re going to hear that housing is crashing, but here are the facts:
• Inventory is Low
• More Homebuyers than homes for sale
• The reason that overall housing prices dropped in 2009: a large amount of homes that were for sale were distressed sales (foreclosures & short sales, which have low or no equity associated), which brought down the overall national purchase price
• A Recession does not necessarily mean a “Housing” Recession
Have we already seen the Market Correction and what does this mean?
• There are a number of economic indicators that we are in a recession (or going into one). Historically when we are in a recession, interest rates drop and subsequently there is a housing boom as a result of more buyer activity
• Rates will likely drop – Dating back to 1970, there has been only one instance of mortgage rates not going down and that was the 1973-1975 recession, triggered by the 1973 oil crisis (rates went from 8.58% to 8.89%) and was in a period referred to as stagflation.
• Home Prices / Valuations – Since 1970, while home prices have dropped during a recession (which could be right now), housing prices have increased in the months and years following a recession (due to more buyer activity from lower interest rates, re-employment, etc.)
• The rate might be higher today, but they will go down and we can refinance. Housing prices will go up in the future and there is nothing that can be done at that point.
Why is it important to watch the data and not the Media Noise?
· Predictions from CoreLogic in June of 2020: CoreLogic HPI Forecast predicts a month-over-month price decrease of 0.1% in June 2020 and a year-over-year decline of 6.6% by May 2021.
· What really happened: From 2020 to the end of 2021, the price of an average home increased 16.9%, the largest single-year increase since 1999
· Even CoreLogic, the leading global property information, analytics and data-enabled solutions provider can get it wrong! WE DON’T HAVE A CRYSTAL BALL, but we can use the data to make a reasonable, educated guess!
My suggestion is that purchasing a home for the long term investment always wins. So give me a call and let’s talk about your situation.
Mary Cockburn/505-639-2090/MaryCockburn.Realtor@gmail.com
