We had another great conversation on Street Talk, with Chris Davies and other guests. I'm excited to share a few key takeaways and I invite you to throw in your earbuds and listen to the latest version.
A FEW KEY TAKEAWAYS
In real estate, opportunities can be fleeting. While concerns about home price run-ups and waiting for better rates may seem justified, the cost of inaction is, indeed, quite high. Let's break it down.
The Inaction Paradox
Some of the same fence-sitters who waited for rates to drop below 2.5% are now waiting for a “market crash” before buying a home. The buyers who choose inaction are left paying rent and accumulating no equity, missing out on potential financial gains.
Why Prices Aren't Dropping
The core of the issue is inventory—or rather, the lack thereof. Many homeowners, thanks to low rates, have witnessed substantial gains in equity. Unless they're compelled to sell, they're opting to sit on their appreciating assets. This stagnant inventory perpetuates the cycle and keeps prices from falling.
The Future of Interest Rates
If you're still holding out for that elusive 5% rate, you might want to reconsider. Rates are likely to remain elevated for some time, but the key is to think long-term. While you might not build immediate equity over the next two or three years, down the road, the value will be there.
When rates eventually do drop, there's a high probability of buyers rushing back into the market. But by then, low inventory will likely translate to multiple offers and increased prices. It might not happen until the end of 2024, but of course, no one knows the interest rate timeline.
The Cost of Waiting
In the real estate landscape, time is money. Median price points have surged by 3-4% since January in Western Washington, and this is just the beginning. If you delay your purchase, you miss out on the opportunity to build equity. Consider this: with a median price of $700,000 and a 5% yearly increase, your payment increases by $4,000 to $5,000 per year. However, you're simultaneously gaining $30,000 in equity while enjoying tax deductions. It's a strategic move that pays off in the long run.
Strategies for the Savvy Buyer
Don't let the fear of higher rates and prices keep you from entering the market if you can afford the monthly payment. Many sellers are offering financial incentives, or you can write these options into your offer. Waiting for the 'perfect' time might only lead to missed opportunities and lost equity. Now is the time to act, secure your investment, and embrace the long-term benefits of homeownership.