What if we are in the best scenario for homeownership that we will see for some time? I’m hearing so many things from homebuyers:
- I’m waiting for rates to fall
- I’m waiting for the Fed to lower rates
- I’m waiting for housing prices to drop
I don’t know if any of these things are going to happen. The Fed is already saying they are probably going to lower rates, which should help. But who knows!
Factors That Are Affecting the Market
Has anyone considered all the debt that is being issued by not only the US but also all of the other countries out there? Bonds that are in competition with mortgage-backed securities for fixed-income instruments. That’s a possibility that I’ve heard a number of people talking about – and it’s likely going to put pressure on rates.
Yes, when the Fed starts to lower rates, I expect to see a bit of a drop in interest rates. But remember that the Fed does not directly drop mortgage rates.
But I don’t see anything out there that is making us think that housing prices are going to fall. The prices have been amazingly resilient through this rate run. I would have never guessed how strong it would be.
Again, it’s a lack of inventory. I don’t see where all the inventory is going to come from. Yes, builders are still building, but the pace won’t keep up with the projected demand. Also, foreclosures are still very low.
Is a Trigger Going to Happen to Change Things?
At the end of the day, this chart I’m showing in the video shows mortgage-backed securities, and it’s what sets rates. As long as investors are still interested in buying these bonds, then we are in good shape. If the investors start running from the bonds, then we are in bad shape.
I hear so many people waiting and hoping that some trigger is going to happen to create the perfect opportunity to jump into the market. I just don’t think hope is a good strategy for the long-term future that real estate creates for people.
Just a bit of food for thought. What if right now is as good as it’s going to get? What if prices go up in the future and rates stay the same? Who knows? I say that you create a strategy around what is happening right now. I’m here to help you find the best strategy for your unique needs.