The Cost of Waiting for Interest Rates in the Housing Market
By Cliff Scherb, agent at the Scherb Homes Group and insights and analysis from Danny Waddell, Loan Advisor at CrossCountry Mortgage)
In today's ever-evolving housing market, there's no shortage of information and opinions. Headlines often swing between sensationalism and cautionary tales, and prospective buyers and sellers are left wondering: What should we believe? To navigate this complex landscape, let's delve into the implications of waiting for interest rates to fall when considering buying or selling a home.
The Fear Factor
Media outlets have a knack for sensationalizing stories to grab our attention, especially when it comes to the housing market. It's not uncommon to see headlines proclaiming a looming housing bubble or the dire consequences of fluctuating interest rates. But as Danny Waddell of CrossCountry Mortgage aptly puts it, "Housing bubble fears are nothing new." It's essential to take a step back and consider the bigger picture.
Historical Context
To gain perspective, let's examine some key trends in the housing market over the past few years. Danny provided us with a table that illustrates the appreciation rates and home prices during this period.
Table: Housing Market Trends Over Time
This table represents some of the top headlines regarding real estate since 2015 compared to the average national appreciation rate. As you can see, the media doesn’t represent the best indications of market movements when slated against actual data. So, when we ask, "If rates are going to come down, why should I buy now?" it's essential to consider the full financial picture and your long term goals.
Property Information
Let's examine the financial details of a property to understand the cost of waiting:
Property Information: “My Property”
These figures provide a snapshot of the property's financial structure today versus the same property in 6 months and one year’s time. (*Note the table is a theoretical demonstration of appreciation and interest rate movement and not promised or actual.)
The Cost of Waiting
To truly appreciate the impact of waiting for interest rates to fall, we need to consider the financial implications:
Cost of Waiting Analysis
These numbers tell a compelling story. While waiting for lower interest rates may drop your monthly payment, you may end up seeing a true loss in your overall portfolio if we follow the appreciation trends over the last 10 years.
Exploring Solutions
So, what are some solutions to consider? One option Danny at CrossCountry Mortgage suggests is exploring the temporary buydown options. These options provide borrowers with a significantly reduced rate for the first two years of their loan. They are applicable to primary and secondary homes, conventional and government fixed rate loans (including construction and renovation loans), and purchase-only transactions for 1-4 unit properties.
Don't Be Deterred
In conclusion, the fluctuation of interest rates should not deter potential buyers or sellers. It's crucial to evaluate the full financial landscape and consider the costs associated with waiting. Keep in mind that refinancing is a viable option in the future to adapt to changing circumstances.
For personalized advice tailored to your financial situation, please don't hesitate to contact Danny Waddell 424.652.6799, Loan Advisor at CrossCountry Mortgage, at danny.waddell@ccm.com. Danny can provide you with expert insights and guide you through the decision-making process in the ever-changing housing market.
