April 24, 2024
U.S. News and World Report published an article in Spring 2024 with data from a U.S. News survey of American mortgage trends this year.
The information from that report indicates that many potential real estate buyers may be delaying their commitments to see what happens with mortgage loan interest rates.
In that survey, 67% of house hunters who responded say they are on a wait-and-see basis with respect to home loan interest rates. These house hunters hope to wait out the rates before buying a house this year.
Also according to the survey, approximately one quarter of the respondents “want to see them below 5% before buying, which isn’t expected to happen in 2024 or even 2025. About half (49%) are willing to wait for more than six months for rates to come down.”
Increased Housing Demand
If you wait to see mortgage rates go lower, keep in mind that increased competition is likely once that trend begins to catch on.
If the majority of the house hunters in your housing market are also waiting to buy until rates begin to fall substantially, the rush to buy when conditions seem right could bring another seller’s market.
In a seller’s market, conditions are not as favorable for the buyer.
Especially those who want to negotiate. In a seller’s market, it may be easier, for example, to refuse a potential buyer who asks for a contingency clause dependent on the results of a home inspection.
Do not give in to pressure to buy a home without it being inspected. It’s typically not worth it.
This point is worth repeating. Buying a house without having a home inspection is NEVER a good idea. But in a seller’s market, there may be pressure to forego that process.
Housing Prices: Increasing In The Meantime?
Don’t expect home prices to stay lower when a rush of “wait-and-see” borrowers hits the market once rates persistently trend lower.
If you decide to wait it out, you may be in danger of paying more for the home if competition and other factors drive prices up. Much depends on the nuances of the housing market you are shopping in.
But some can’t just wait around hoping that rates will fall and stay there. What do you choose in a situation like this?
In some cases, a borrower should consider buy-now options, including an FHA adjustable-rate mortgage, which may help save money in the earliest days of the loan.
Another option is to consider a fixer-upper you buy and renovate using an FHA 203(k) rehabilitation mortgage.
Talk to an FHA lender to learn more about your FHA home loan options. What does it mean to buy a house with a purchase loan compared to getting a fixer-upper with a rehab loan?
Depending on your circumstances, you could find these options preferable to trying to wait out the housing market.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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