As we approach the middle of the year, questions about performance of the real estate market nationally remain top of mind for most buyers and sellers.
As an experienced real estate agent in your neighborhood, I have experienced this market uncertainty before, and I assure you it will pass.
Many property market experts continue to speculate that interest rates will start to trend down from the middle of the year. JP Morgan even predicted that there would be four cuts in quick succession to stimulate the housing market.
With rates hovering around 7%, it is not inconceivable that we’ll be closer to 6% by the end of the year.
That’s undoubtedly Fannie Mae’s view on 30-year, fixed-rate mortgages. It believes we’ll have a 6.4% rate by the end of the fall. The fact that the national inflation rate remains stubbornly above 3% significantly influences this prediction.
The Mortgage Bankers Association’s (MBA) forecast is slightly less aggressive, predicting mortgage rates could hover in the 6.3% to 6.6% range during the peak home-buying season that runs until the end of September. By the end of the year, it believes the rate will be 6.1%.
The influential National Association of Realtors (NAR) agrees with a 6.1% rate by the end of the year and feels rates will be mid-6% through summer and fall.
So, buyers with new mortgage deals can expect their costs to decrease in the first few months of ownership.
Seeing the Federal Reserve take a knife to rates will stimulate the market, and buyers should expect to see more choice as the second half of the year progresses.
However, inventory will still be lower than the 10-year average, keeping prices buoyant.
Fannie Mae believes home prices will rise 3.2% this year. The MBA predicts a 4.1% rise, while NAR offers a conservative 1.4%.
If you’re considering entering the market in the short term, you may find this checklist helpful.
Cash ready
Shop around for the best deal in the mortgage market. However, watch out for the terms and conditions. The deal with the lowest interest rate isn’t always going to serve you best. Sometimes, a slightly higher rate with more flexibility will better suit your needs.
Be pre-approved
If you’re about to start home-hunting seriously, then seek a pre-approved mortgage from your preferred lender. If you find your dream home without one, the owner will not be interested in waiting around while you sort out your financial situation.
Helping hand
If you’re a first-time buyer, research all the grants and assistance programs available that will help make your first home more affordable.
Take time
The property market can turn on a dime, but you still need to be conservative and sensible in your approach. Do not rush into a purchase because of FOMO (fear of missing out).
Be flexible
Continue to build your savings, but make sure that when you apply for your loan, you will be able to capitalize on the predicted cuts in mortgage rates.