Now Is an Ideal Time For Homebuyers
After months of waiting on the sidelines many homebuyers who were challenged with high mortgage rates and affordability issues now have a chance to make their move. With rates decreasing, the current market is favorable for buyers, but this situation might not last long. If you have been hesitating to make a move, think about why you might want to act now. As you debate your move, ask yourself: What will other buyers do?
If mortgage rates keep going down, as experts expect, more buyers are going to return to the market. A survey from Bankrate indicates that over half of homeowners would be willing to buy this year if rates fall below 6%. With rates already in the low 6% range, we are close to reaching that level. Once rates fall into the 5% range, the number of buyers will likely surge, which means more buyer competition for you.
This higher demand could mean rising home prices, possibly reducing some advantages of having lower mortgage rates. Nadia Evangelou, a Senior Economist at the National Association of Realtors, explains that higher demand can push home prices up as multiple buyers compete for limited homes. In areas with housing shortages, this price increase can offset some benefits of lower mortgage rates. So, while waiting might seem smart, it could work against you if prices rise faster than your savings from the lower rates.
What This Means for You
Right now, you have a chance to prevail from this situation. The current market is good for buyers because many are still waiting, resulting in less competition for homes.
Affordability has also improved with recent reductions in mortgage rates having made owning a home easier. Mike Simonsen, from Altos Research, shares that typical mortgage payments are 7% lower than last year and 13% lower than their peak in May 2024.
While home supply is still low, it is better than it has been in years. Ralph McLaughlin, an Economist at Realtor.com, notes that the number of homes for sale has increased by 35.8% compared to last year, reaching the highest level since May 2020.
This situation gives you more options to choose from than you’ve had in a long time. With fewer buyers, improved affordability, and more homes available, you can find the right home before competition gets more fierce.
Why Waiting Could Cost You
If you are waiting for the perfect moment to buy, keep in mind that predicting the market is very difficult. The longer you wait, the greater the chance that conditions will change—and not always in your favor. Greg McBride, Chief Financial Analyst at Bankrate, warns that a further drop in rates could lead to a surge of buyers, making it harder to purchase a home.
