The biggest question in real estate in America today has nothing to do with property and everything to do with money.
More accurately, the cost of money.
The health of the property market is always precariously balanced by the direction of the money markets, the Federal Reserve’s prevailing view on inflation, and how it uses interest rates to influence its direction.
With interest rates still in the 7% range, Americans continue to experience pent-up demand and frustration about their ability to buy and sell property.
Making a move now usually means renegotiating with your lender. So, the sweet 2% to 4% deal they cut back in 2018 will not be replicated today.
While many experts predict rate cuts will start in the next eight to 12 weeks, recent economic data tempers some predictions.
Ironically, it is good news that’s doing the damage. Here’s an example: the US economy added 300,000 jobs in March, according to the Labor Department. However, with so many new wage packets in the system, that could slow the fall of inflation and delay rate cuts.
The market upturn many had hoped for in late spring and summer may be pushed to as late as the fall, according to one economist.
Bright MLS Chief Economist Lisa Sturtevant said in a statement: “The traditionally busy spring housing market could be pushed into summer, or even into the fall, if buyers hold out for the Fed’s rate cut and subsequent drops in mortgage rates”.
As an experienced real estate agent, I would warn against trying to time the market for the optimum moment to purchase. By the time you recognise the opportunity exists, it will have passed. This list of five common buying mistakes may be helpful.
Low predictability
Several factors, including economic conditions, interest rates, and local demand-supply dynamics influence the property market. These combine to make market predictability difficult. Don’t wait for prices or mortgage costs to drop.
Stress and uncertainty
Trying to time the market can lead to indecision, which could cloud your judgment and be emotionally troubling.
Cost of waiting
Waiting for the market to behave in a certain way may already cost you money, especially if you’re renting. Make your purchase when your personal circumstances allow you to do so. Overthinking the market leads to disappointment and frustration.
Rushing your decision
Conversely FOMO, or the fear of missing out, also leads to poor decision-making. So, even if you think you’ve found the optimum time to buy, you should never rush into a deal. Buyer’s remorse is a costly consequence of a poor property choice.
Failing to think long-term
When purchasing property, it’s essential to consider the bigger picture. Unless you’re going to flip it within 12 months, you want to consider the property’s potential for long-term appreciation. The nuances of today’s market will quickly become a distant memory.