Navigating the Current Real Estate Market: Insights and Opportunities
Understanding Market Dynamics and Buyer Sentiment
As the year winds down, the real estate market presents a unique set of challenges and opportunities. Many potential buyers are currently on the sidelines, influenced by the prevailing sentiment that now may not be the best time to make a purchase. This hesitation is primarily driven by high-interest rates and concerns over affordability, encompassing factors like property taxes and insurance on top of the purchase price.
The Role of Interest Rates in Affordability
Affordability remains a central concern. To address this, we need a combination of lower interest rates and reduced property prices. Interestingly, recent trends show a decrease in interest rates, sparking a sense of urgency in the market. This change is evidenced by an increase in purchase applications, hitting a 10-week high, indicating that buyers are actively seeking pre-approvals and engaging with the market.
Market Indicators: Home Sales and Economic Forecasts
Currently, home sales are at a 13-year low, the lowest since 2010. The Federal Reserve's anticipation of lower rates in 2024, with potential rate cuts as early as March 2024, further shapes market expectations. The upcoming Federal Reserve meeting on March 19th and 20th is crucial, with the market predicting stable rates. This stability is key to maintaining confidence in the market, as seen in the recent boost in the stock market and lower mortgage rates.
Mortgage Rate Trends and Options
Exploring mortgage options, we find varied offerings like the 3/1 ARM at 5.875% and the 7/6 ARM at 6.25% from Wells Fargo, and a 30-year fixed rate at 6.5% from JVM Lending. FHA loans with 3.5% down payments and VA loans are both available at 6%. It's noteworthy that standard 30-year fixed rates are hovering around 3.5% for Jumbo and conforming loans.
The Current Buying Climate and Strategic Approaches
December presents an excellent opportunity for buyers. The holiday season typically sees quieter market activity, making it an ideal time for serious buyers to get pre-approved and make offers. Sellers with properties on the market are likely motivated to close deals before the year ends, providing leverage for buyers. A strategic move for buyers could be to negotiate a seller credit in the offer, which can be used for a temporary buy down on mortgage rates.
Temporary vs. Permanent Buy Downs
A temporary buy down, such as a 2/1 buy down, allows for a lower rate in the initial years, reverting to the current market rate thereafter. This contrasts with a permanent buy down where the paid points are non-recoverable, especially if refinancing occurs within a short period. Most high-level mortgage officers advise against paying for permanent points due to the likelihood of refinancing in the near future.
Looking Ahead: 2024 and Beyond
As we approach 2024, the market is expected to become increasingly active. We encourage prospective buyers to seize the current opportunities and engage with the market, capitalizing on the unique conditions present.
At Faber Real Estate Team, we are committed to being The Key to Your Dreams®. We offer extensive resources and personalized guidance to help you navigate these market conditions. Reach out to us to explore your options and take your next step in the real estate journey.
Faber Real Estate Team \ Compass
The Key to Your Dreams ®
Ben Faber DRE #01913767
[email protected]
www.faberrealestateteam.com
@faberrealestateteam
🤙🏽415.686.4980